London Stock Exchange - New ETF Listings 2007

2007 LSE ETF Listings: New Challengers and Niche Themes

The 2007 ETF listing calendar for the London Stock Exchange represents a critical inflection point in the history of the European market. While the earlier years of the decade were defined by a near-monopoly of broad beta products from a single issuer, 2007 marked the definitive arrival of fierce competition and the rollout of highly specialized, thematic, and faith-based investment solutions.

The Arrival of Xtrackers: The Competitor Awakens

One of the most defining shifts in the 2007 landscape was the formal entrance of Xtrackers (launched originally as db x-trackers by Deutsche Bank). Prior to 2007, the European ETF market was overwhelmingly dominated by Barclays Global Investors' iShares. The launch of the Xtrackers platform brought a massive, well-resourced global investment bank into the ETF arena.

Crucially, Xtrackers largely utilized synthetic (swap-based) replication. This allowed them to launch products tracking complex, hard-to-access, and less liquid markets with very low tracking error, rapidly expanding the universe of investable indices available to LSE participants and sparking an intense competitive rivalry that would shape the industry for the next decade.

The Launch of Islamic-Focused Investment Solutions

As the ETF wrapper gained global traction, 2007 saw issuers beginning to cater to specific demographic and ethical requirements, most notably through the launch of Shariah-compliant funds.

To serve Islamic investors who require their portfolios to align with their religious principles (which prohibit investments in alcohol, gambling, conventional financial services, and highly leveraged companies), iShares launched a pioneering suite of Islamic ETFs in December 2007. These included:

• iShares MSCI EM Islamic UCITS ETF
• iShares MSCI USA Islamic UCITS ETF
• iShares MSCI World Islamic UCITS ETF

These launches were highly significant as they essentially democratized access to Shariah-compliant portfolios, providing liquid, low-cost options to a massive global investor base that had historically been underserved by the passive asset management industry.

Other Investment Ideas and Themes Launched

Beyond the shifting issuer landscape and faith-based funds, 2007 saw the launch of several distinct investment ideas that moved far beyond basic regional equities:

• Thematic Resource Scarcity: Acknowledging global demographic shifts and environmental constraints, issuers brought targeted "mega-trend" funds to the exchange, highlighted by the launch of the iShares Global Water UCITS ETF. This allowed investors to specifically target companies involved in water treatment, utilities, and infrastructure.
• Democratizing Alternatives: Historically, private equity was an opaque asset class strictly reserved for institutional investors and high-net-worth individuals. The launch of the iShares Listed Private Equity UCITS ETF in 2007 offered daily, exchange-traded liquidity for a basket of publicly traded private equity firms, making the "Alternative" asset class accessible to the retail market.
• The BRIC Phenomenon Peaks: The narrative surrounding the hyper-growth of Brazil, Russia, India, and China reached a fever pitch in 2007. Responding to this demand, issuers rolled out highly concentrated thematic emerging market plays, such as the iShares BRIC 50 UCITS ETF, giving investors a singular tool to capture the growth of the world's fastest-developing heavyweight economies prior to the onset of the global financial crisis.