Source, a leading European provider of exchange-traded funds, has launched two new funds on the London Stock Exchange providing targeted exposure to the financial services and real estate sectors of the S&P 500 equity index. The launch of these new ETFs reflects revisions to the Global Industry Classification Standard structure announced by S&P Dow Jones Indices that will be implemented in August 2016.

Source has unveiled two new ETFs targeting the financial services and real estate sectors of the S&P 500 equity index.

Christopher Mellor, Equity Product Management at Source, commented: “The drivers of equity market returns typically shift along with changes in the economic climate and investor risk appetite.  Some sectors tend to behave differently during certain phases of the cycle, and investors wanting to take advantage of this sector rotation are able to adjust their portfolio exposures through sector ETFs.  These have been extremely popular tools for our investors, who currently have more than $1.6bn of assets across our range of US sector ETFs.”

The Source Financial Services S&P US Select Sector UCITS ETF (XFNS) and the Source Real Estate S&P US Select Sector UCITS ETF (XRES) each track the performance of the relevant S&P Select Sector Capped 20% Index. Weightings are based on market capitalisation, with individual constituents capped at 20% to ensure UCITS-compliance. Both funds trade in US dollars and charge annual management fees of 0.30%.

The indices have shown high correlation with the (uncapped) S&P Select Sector Indices, which are used as the underlying for many US-listed ETFs but are not UCITS-compliant. The performance track records of Source US Sector ETFs compared to their reference indices have been consistent, with tracking errors typically less than 0.003%.

US sectors are one of the most actively traded market segments in the world, with around $6bn worth of sector ETFs traded each day.