ETF Landscape: United Kingdom Industry Review - BlackRock ...

ETF Landscape Year End 2010United Kingdom Industry Review from BlackRockFigure 11: Comparing ETFs and mutual fundsCharacteristic ETFs Active mutual funds Index tracking mutual fundsStructure Open-ended fund Open-ended fund Open-ended fundInvestment objective Replicate an index Outperform an index Replicate an indexTrading Intraday during LSE market hours Once a day or less frequent Once a day or less frequentAccessibilityPricingVia a stock broker orwrap platformPriced at close to Net Asset Value(NAV) and continually in market hoursVia fund manager orfund supermarketsPriced daily close tofund NAVVia fund manager orfund supermarketsPriced daily close tofund NAVExpense ratios TER TER TERBid/ask spread Yes Yes (unless single priced) Yes (unless single priced)Dividend treatment Distributing or accumulating Distributing or accumulating Distributing or accumulatingTransparency High Low LowMinimum investment size No Yes YesExit/penalty fees No Sometimes SometimesTracking error Low High LowReturns variability Low High LowManager selection risk No Yes NoTax wrapper inclusionISA/SIPP Yes Yes YesOffshore bond Yes Yes YesSource: Exchange Traded Funds, A Guide for UK Financial Advisers, BlackRock.Figure 12: United Kingdom mutual fund industryAssets (US$ Mn)1,200,000# funds3,0001,000,0002,500800,0002,000600,0001,500400,0001,000200,00050002005 2006 2007 2008 2009 2010Assets (US$ Mn) $642,596 $871,398 $946,182 $560,299 $821,763 $950,480# funds 1,951 2,107 2,247 2,483 2,555 2,5980Source: Strategic Insight Simfund Global.13 This document is not an offer to buy or sell any security or to participate in any trading strategy. Please refer to important information and qualifications at the end of this material.