Source EURO STOXX Optimised Banks UCITS ETF will aim to reduce investor exposure to illiquid stocks and provide a more tradable benchmark within the sector.
The $18bn (£111.7bn) asset manager’s decision to list the ETF comes in the wake of the European Central Bank’s (ECB) asset quality review, in which 25 European banks showed capital shortfall totalling $24.6bn (£152.7bn).
Michael John Lytle, Source’s chief development officer, said: “The results of the European Central Bank’s asset quality review have shed light on the health of the region’s banks as well as the broader European economy.
“For investors who want to increase their exposure to Eurozone banks, this ETF provides the opportunity to gain access quickly and efficiently.”
Paul Jackson, head of the Source’s multi-asset research department, believes that increased transparency will encourage more investments in the European banking sector.
“The process that the ECB and the EBA have gone through is another step towards increasing confidence in the banking system,” he said. “It shows that the amount of regulatory oversight has gone up – it gives the information that is available on these banks and makes it more consistent.
“It has pushed the feet of the banks to the fire and already forced them to raise a lot more capital and a few of them will have to raise a bit more.
“As far as I’m concerned while it hasn’t eliminated the risks in the banking sector it has reduced them and I think as a sector it is good value and investors are more likely to buy into it now than they would have been a year, two years or even a week ago.”
The fund will trade in GBP with the Euro as the base currency and carries a management fee of 0.30% per annum.
It is the second banking sector ETF that the investment firm has listed on the LSE after the Source STOXX Europe 600 Optimised Banks UCITS ETF.
