By Genevieve Cua

IN keeping with the trend towards simplicity and lower costs, Barclays Capital has launched a fund that offers investors a chance to participate in the global economic recovery theme.

The Global Stimulus Portfolio will allocate funds into sectors expected to benefit from recovery - infrastructure, financials, health care, energy, Asia and gold.

The difference from traditional funds is that the allocation is being made purely into exchange traded funds (ETFs). Each sector has an equal weight of about 19 per cent, except for gold whose weighting is expected to be 5 per cent. The funds are screened for size and liquidity.

In keeping with the almost fixed allocation, annual management fees are lower than for an actively managed fund at 70 basis points. The fund is currently distributed exclusively by Citibank. It will be open to other distributors after next week.

Tan Yong Sheng, Barclays Capital director of investor solutions, says: 'We do believe the sectors will benefit from the global recovery. In three to four years, if the recovery is intact, the manager does have the right to change the allocations.'

Barclays expects global growth to have approached 4 per cent in the third quarter of this year and to continue at more than 4 per cent through to Q1 2010. This represents one of the fastest periods of sustained growth in the past two decades.

In terms of fiscal spending, OECD countries are expected to spend 48 per cent of their stimulus packages this year and a further 37 per cent next year.

Barclays unit trusts are typically structured funds - total return swaps with exposures to various indices. 'We do feel the market is changing,' says Mr Tan. 'Investors are trying to be more self-directed. This fund offers a low-cost approach. There is no alpha. It's pure beta exposure to the recovery story.'

ETFs have been seeing strong inflows through the crisis. Data from Barclays Global Investors show global ETF assets hit an all-time high of US$933 billion by the end of Q3. Year to date, assets have risen 31 per cent, which beats the 22.5 per cent rise of the MSCI World index.

Active managers are expected to jump into the fray by offering products that allocate assets into ETFs. So far in Singapore, a couple have done so. One offering is DBS Asset Management's MyHome fund, which offers exposure to the DBS STI ETF and the ABF Singapore Bond ETF.

Investors can, of course, invest in ETFs themselves. But locally listed ones are thinly traded and punters may have to contend with fairly wide bid/ask spreads. They can access a multitude of funds, however, through online brokerages.

This article was first published in The Business Times.