Bermuda Ranks In ETF Top Five

November 23, 2011

Bermuda has become one of the top five overseas jurisdictions for US-listed exchange traded funds, a website specialising in the investments reports today [Nov.23].

Along with Switzerland, Canada, China and the United Kingdom, Bermuda is among the most represented countries based on American-listed equity ETFs says the on-line ETF Data Base [ETFdb].

“As the ETF universe has expanded rapidly over the past few years, so too has the reach of its exposure,” says the website. “Where there was once only a few hundred products for basic investing, there now stands over 1,400 ETFs with more than one trillion in combined assets.

“… With so many young funds [the] breakdown of country exposures can be hard to wrap your head around. While the US is obviously the most represented country as far as ETF exposure is concerned, there are a number of other foreign countries that receive a fair amount of allocations.”

An exchange-traded fund [ETF] is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day.

“Perhaps the most surprising result on the list, Bermuda exposure comes in higher than countries like Germany, Japan, the Netherlands and a number of other popular markets,” said the ETFdb. “To be fair, Bermuda is considered a British territory, not its own nation, though it still stands in the mid-Atlantic as its own entity.

“It is also the only region on this list that does not have a fund dedicated to it, but instead is represented, although minimally, in many other products.

“All in all, Bermuda is among the top ten country allocations in about 160 ETFs, but no single fund grants more than 18 percent of its assets to the region; the Global X Shipping ETF [SEA] has the highest Bermuda exposure of any current product.”

The website noted, however, that the island’s high ranking on its list generally reflects the inclusion of securities traded in Bermuda, though not necessarily headquartered there.

“The Bermuda Stock Exchange is one of the world’s largest fully electronic offshore securities markets, and reported aggregate market capitalization of more than $300 billion at the end of 2010,” said ETFdb. “In addition to secondary listings for international companies, the BSX features trading in a number of derivative warrants and collective investment vehicles; those two asset classes account for almost all of the total listings.

“The region is very affluent and is currently using the Bermudian dollar [which is pegged to the US dollar] as its currency. The majority of products that invest in Bermuda are materials-based funds though there are a handful of Chinese-focused ETFs that also set aside assets for this small region.”

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