Source has launched a new ETF, the Source MSCI Europe ex-UK UCITS ETF (Xetra: MXUK), on Deutsche Börse’s Xetra platform. The fund provides investors with exposure to large and mid-cap stocks across 14 developed countries in Europe while excluding those from the UK.

Chris Mellor, product specialist at Source.

Chris Mellor, product specialist at Source, commented: “Many of our investors use ETFs because they offer the ability to target specific exposures. For instance, some investors may want to separate their exposures to Europe and the UK, especially after last week’s election resulted in a hung parliament. This ETF effectively puts them in control of the allocation.”

The fund’s underlying index is the MSCI Europe ex-UK Total Return (Net) Index. It includes companies ranked in the top 85% of their respective country based on market capitalisation. At present, there are 335 index constituents.

As of 13 June, the significant sector exposures are financials (22%), consumer goods (20%), industrials (16%) and health care (15%), the significant country exposures are France (22%), Germany (21%) and Switzerland (18%), and the largest components of the index are Nestle (4.1%), Roche (2.9%) and Novartis (2.8%).

The index has returned 11.8% in the year to 31 May compared to 7.45% returned by the MSCI Europe Index.

The ETF is synthetically replicated and has a total expense ratio (TER) of 0.20%.

The new ETF will be competing against the iShares MSCI Europe ex-UK UCITS ETF (LON: IEUX), which has AUM of €2.6 billion and a TER of 0.40% and the Vanguard FTSE Developed Europe ex UK UCITS ETF (LON: VERX), which has AUM of €443 million and a TER of 0.12%.