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The ASX listed ETFs to watch as a result of Brexit

ETF Watch - Jun 26, 2016

To the surprise of everyone except maybe Boris Johnson, with 51.9% of the vote, the UK has voted to leave the European Union. Markets have reacted with expected volatility, and experts clamour to give their view on what this unexpected result means. We’re not in a position to provide our own forecasts, but we will look at some of the ETFs that are sure to be affected by this momentous event. 

Currency ETFs

Upon the Brexit announcement, the UK pound dropped over 10% against the US Dollar. Some experts forecast further weakness in the Pound. There is one ETF available on the ASX which tracks the Great British Pound against the Australian Dollar, the Betashares British Pound ETF (POU) has management costs of 0.45% pa.

European Equity ETFs

Not surprisingly, global equity markets plummeted once the Brexit announcement became official. At one stage London’s FTSE 100 fell more than 8%. No equity markets will be spared from volatility but those most affected will likely be those closest to the action, being those in the UK and Europe. Astoundingly, there are no ETFs available in Australia which track the FTSE 100 or any other UK domiciled indexes and we wonder if this will change now that the UK will be decoupled from the rest of Europe. There are however a few European Equity ETFs available, the largest being the iShares Europe ETF (IEU) with a management cost of 0.60% pa. Vanguard’s FTSE Europe Shares ETF (VEQ) has the lowest cost at 0.35% pa, and for those after something a little more exotic, UBS offer the IQ MSCI Europe Ethical ETF (UBE) with management fees of 0.40% pa and one of Betashares latest offerings is its Wisdomtree Europe ETF – Currency Hedged (HEUR) with fess of 0.45% pa.

Gold ETFs

After a few years in the doldrums, global uncertainty has seen Gold back in favour in recent times, and after the Brexit announcement Gold hit a record high in Australian dollars. We’ve previously covered the Gold ETFs available on the ASX. The table below lists the ETFs available to investors interested in the shiny metal.

Ticker GOLD PMGOLD QAU ZGOL
Name ETFS Physical Gold Perth Mint Gold Betashares Gold Bullion ETF - Currency Hedged ANZ ETFS Physical Gold ETF
Inception Date March 2003 December 2010 May 2011 June 2015
Market Cap $425m $86m $20m $1m
Management Fees 0.40% 0.15% 0.49% 0.40%
Physical Holding Location London Perth London Singapore

Time will tell whether Brexit is a catalyst for another Global Financial Crisis type event or whether it will just go down in history as a big shock that didn’t have the impact anyone expected. One thing is for certain though, the next 6-12 months will be interesting to watch!

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