Barclays: the Big Daddy of ETFs

By: Carl Delfeld
Submitted: 2007-01-17 16:16:37
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While picking exchange-traded funds for you global portfolio, have you ever thought; “maybe I should invest in the companies that develop and sponsor the ETFs?” If so, now is the time to take a stake in Barclays PLC the sponsor iShares which is the largest family of ETFs.

Barclays PLC (BCS) is a huge global financial services firm with 114,000 employees and Barclays Bank is the flagship subsidiary that traces its roots back to the 17th century. It is the second largest bank in the UK servicing 14 million consumers and 600,000 businesses. This is a cash-cow business and the business bank profits have grown more than 20% annually since 2001. The bank is also active in France, Italy, Portugal and Spain as well in Asia and the Middle East.

A related business is Barclaycard which is Europe’s biggest credit card issuer and accounts for about 13% of the groups total profits. Barclaycard issued the first credit card in the UK in 1966. Then there is the dynamic investment banking arm Barclays Capital which accounts for 23% of profits. This group focuses on debt and is getting stronger in Asia and emerging markets.

Now we come to the founder of iShares and second largest money manager in the world, Barclays Global Investors (BGI) that has operations in 47 countries and relationships with 2,500 clients. BGI created the first index strategy in 1971 and the first quantitative index strategy in 1978. Then came the creation of iShares in 2000 which ignited the ETF revolution in investing. I say revolution because iShares ETFs capitalized on and combined three major developments in 20th century investing: the growth in the popularity of common stocks, then mutual funds and finally indexing.

With more than 100 ETFs on the market iShares has garnered the majority of the ETF business and shows no signs of sitting on its lead. BGI now has more than $1.5 trillion under management and contributes 10% to Barclays bottom line while a sister group handling wealth management adds 3%. BGI now offers more than 111 iShares ETFs totaling $207 billion assets under management. In May, 2005, it added ten new subsector ETFs.

Just last week Morningstar raised its target price for Barclays PLC ADR (BCS) to $59, a nice premium to its current share price of $46 price. They estimate that the 20% return on equity for 2005 will rise to 24% and that operating profit will grow at an annual 12% clip through 2010.

Add the father of ETFs to complement your ETF portfolio.

Carl T. Delfeld President & Publisher Chartwell Partners http://www.chartwelladvisor.com/

Carl has over twenty years of experience in the global investment business with a strong background in Asia.

• Author of global investor primer "The New Global Investor"
• President of the global investment advisory firm Chartwell Partners
• Publisher of the Chartwell Advisor ETF Report and Asia-Pacific Growth
• Columnist on global investing with Forbes Asia: "Global Gambits"
• Former U.S. Representative to the Executive Board of Asian Development Bank
• Chairman of the global economic strategy think tank ChartwellAmerica
• Asian specialist with the U.S. Joint Economic Committee and the U.S. Treasury
• Former member of the U.S. Asia Pacific Economic Cooperation Committee
• Former investment executive with Robert Baird & Company and UBS
• Graduate of the Fletcher School of Law & Diplomacy with economics scholarship from U.S.-Japan Friendship Commission
• Exchange student at Sophia University, Japanese Ministry of Education Fellow at Keio University

Article source: Expert Articles