Exchange-traded product provider VelocityShares has launched the VelocityShares Equal Risk Weighed Large Cap ETF (ERW).
Equal risk weighting is an alternative to both traditional market cap weighted indices and overly simplistic “low volatility” indices.
“Investors are interested in low volatility equity portfolios, and equal risk weighting represents an important step forward as a means of intelligently allocating to low volatility stocks,” says Nick Cherney, chief investment officer and co-founder of VelocityShares. “ERW is a further example of our commitment to delivering sophisticated investment instruments to the exchange traded market.”
The ETF seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the VelocityShares Equal Risk Weighted Large Cap Index.
The index is designed to reflect the performance of a portfolio holding a weighted exposure to stocks comprising the S&P 500 Index. The target weighting of each stock is determined using a proprietary risk-weighting methodology that measures a stock’s risk exposure and then weights the positions such that each stock is expected to contribute the same level of risk to the Index.
The index is sponsored by VelocityShares Index & Calculation Services.
