EXH7
iShares STOXX Europe 600 Industrial Goods & Services UCITS ETF (DE)
Published by Radif Partners · Updated
Overview
iShares STOXX Europe 600 Industrial Goods & Services UCITS ETF (DE) (EXH7) tracks the STOXX Europe 600 Industrial Goods & Services index and holds its constituents directly, a physical replication managed by iShares. Dividends are paid out to holders rather than reinvested, so EXH7 suits investors seeking regular income. The fund is domiciled in DE, which determines the withholding tax treatment applied to its dividends. Annual charges come to 0.46% of assets, and the fund holds 180M under management. Over five years the fund returned -1.3% a year on average, against 1.3% over three years. It is not eligible for the French PEA, but can be held in a securities account, a UK ISA or a German Depot. Its risk level is rated medium. Launched on 2006-07-18, the fund is denominated in EUR and has 20 years of track record. It is a UCITS fund, so it follows the European framework on diversification, liquidity and asset segregation. Because EXH7 distributes, every payment is taxable in the year it is received, against the dividend allowance in a general account, while it stays sheltered inside an ISA or a SIPP. Domicile in DE sets the withholding the fund itself suffers on the dividends it receives, a cost absent from the stated fee but present in the return.
At 0.46%, this fund costs more than twice the median of its category (0.19%) and over 23.0 times the cheapest (0.02%). On £10,000 the gap to the median is worth about 270 over ten years, and that difference is certain in a way no performance gap is. A premium can be justified, by an index no competitor tracks, by a useful trading currency, or by size that guarantees liquidity; it is not justified by the brand. The question is therefore plain: what does this fund offer that the cheapest on the list does not?
Replication is physical: the fund actually holds the constituents of STOXX Europe 600 Industrial Goods & Services, which makes its contents verifiable line by line in the issuer's report. Two points deserve attention. Securities lending first, practised by most physical funds to reduce costs: it earns a few hundredths of a point and creates an exposure to the borrower, covered by collateral, with the annual report stating the proportion lent. Rebalancing second: every change in the index's composition forces the fund to buy and sell, and those internal costs are not in the 0.46% headline. That is why two funds at the same price do not track their index with the same fidelity.
The fund is domiciled in DE, outside the two usual homes for European listed funds. Three checks come before buying: whether your broker lists it, since a fund outside the usual venues is not always dealable from a European account; what withholding the fund suffers on dividends it receives, which follows DE's treaties rather than your country's; and how your own tax authority treats it, an answer that can differ from the treatment of an Irish fund tracking the same index.
Income is distributed: the fund pays out the dividends it receives, usually one to four times a year. For a holder living off the portfolio that is what is wanted, since the income arrives without selling. For someone still accumulating it is a tax disadvantage in a taxable account: each payment is taxed in the year received, so the amount reinvested is reduced before it starts working again. Reinvesting by hand also costs a dealing commission each time and often leaves cash idle for want of the price of a whole unit. An accumulating class on the same index, where one exists, settles the question.
With 180 million in assets and 20 years of history, this fund has the size and the record that make closure unlikely and the spread narrow. Three checks remain, once a year, none of which depends on the market. The ongoing charge, which an issuer revises without notice and whose gap to a competitor can invert. The tracking difference, the only figure that says whether replication stays faithful. And the methodology of STOXX Europe 600 Industrial Goods & Services, which can change its selection or weighting rules without the fund's name moving, in which case what you hold has changed with nothing to announce it.
STOXX Europe 600 Industrial Goods & Services is a sector index, and that is an explicit bet: the portfolio gives up diversification across sectors to take a position in one. Three consequences follow. Concentration first, often around twenty companies whose top three make up a notable share, so the outcome depends on identifiable firms. Internal correlation next, which defeats the idea of dampening risk within the sector. And timing last: a sector runs in long cycles, and entry rarely lands well when the purchase follows a strong rise already published.
Over one year the fund shows -8.9% against -1.3% annualised over five years: the recent year lags the long average. Before drawing a conclusion, two possible causes have to be separated, because they have different consequences: a fall in the index tracked, which affects every fund replicating it, or a deterioration specific to the fund, which shows in the tracking difference rather than in the return.
0.46%
180M
180M EURMedium
454
Physical
Distributing
EUR
DE
STOXX Europe 600 Industrial Goods & Services
iShares
2006-07-18 (20 years)
Contextual Analysis
Fund Size
With 180M in assets, this is a mid-sized fund, decent liquidity for most investors.
Fee Positioning
A TER of 0.46% is above the market average (~0.35%), justified if the strategy is specialized.
Track Record
Launched in 2006-07-18, this fund has 20 years of history, long and reliable track record.
Risk Profile
Medium risk, good risk/return balance for a 5+ year horizon.
Performance
Returns Summary
| Period | Ann. Return | Cumulative |
|---|---|---|
| 1 Month (est.) | – | -0.8% |
| 3 Months (est.) | – | -2.3% |
| 6 Months (est.) | – | -4.5% |
| YTD (est.) | – | -3.8% |
| 1 Year | -8.8% | -8.8% |
| 3 Years | +1.3% | +3.9% |
| 5 Years | -1.3% | -6.1% |
| Since inception (20y) | -2.9% | -45.0% |
Key Facts
Fund Profile
Themes & Zones
Holdings
Risk
How to Buy This ETF
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About this ETF
The iShares STOXX Europe 600 Industrial Goods & Services UCITS ETF (DE) tracks the STOXX Europe 600 Industrial Goods & Services index. It is managed by iShares using physical replication and follows a distributing distribution policy. The fund is denominated in EUR and domiciled in DE. It has a total expense ratio (TER) of 0.46%.
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Frequently asked questions
What do EXH7's 0.46% charges actually cost?
They are taken from the fund's value continuously and never billed separately: on £1,000 invested that is about £4.60 a year and roughly £46 over ten years at a constant amount. That is the only cost of the fund itself. Your broker's commission and the spread between buying and selling price come on top, and they weigh most on small frequent purchases.
What should you re-check on EXH7 once a year?
Three things, none of which depends on the market. The ongoing charge, which an issuer revises without notice and whose gap to a competitor can invert. The tracking difference, the only figure that says whether replication stays faithful. And the methodology of STOXX Europe 600 Industrial Goods & Services, which can change its selection or weighting rules without the fund's name moving: in that case what you hold has changed with nothing to announce it.
Does EXH7 lend out the securities it holds?
Probably in part: most physical funds lend securities to reduce their costs, and iShares publishes the proportion in the annual report. Lending income is worth a few hundredths of a point, shared between the fund and the issuer. The risk is the borrower's, covered by collateral worth more than the amount lent, and it appears in the prospectus rather than in the stated fee.
Does EXH7 pay dividends?
Yes: the fund distributes and pays out the dividends it receives, on a calendar set by iShares. The payment is taxable in the year you receive it in most accounts, even if reinvested at once, and reinvesting by hand costs a commission each time. An accumulating class on the same index avoids that friction for anyone who does not need the income.
What happens if EXH7 closes?
At 180 million in assets, this fund is small enough for a merger or a wind-up to be a real prospect. On liquidation the holdings are sold and the proceeds paid to you on a date you did not choose, so with a gain that may be taxable at the wrong moment. On a merger your units move to another fund whose index is not quite the one you picked.
This ranking is for informational purposes only and does not constitute a recommendation to buy or sell any security. Displayed performance is simulated.