Source has launched the Source Goldman Sachs Equity Factor Index World UCITS ETF offering exposure to a Goldman Sachs-developed index designed to outperform traditional market capitalisation-weighted benchmarks.
The Goldman Sachs Equity Factor Index World Net TR offers broad global equity exposure emphasising five equity market factors: size, value, momentum, quality and low beta. It aims to deliver consistent outperformance versus market cap benchmarks, on an absolute and risk-adjusted basis.
“Factor investing is nothing new,” says Quentin Andre, co-head of equity structuring and marketing for EMEA at Goldman Sachs. “However, individual factor returns sometimes diverge significantly from established benchmarks and can add significant risk to a portfolio. To achieve consistent outperformance, diversification is key. We have selected five factors – all well-supported by academic research – and developed an index that delivers efficient, diversified exposure”.
As of 31 December 2013, the Goldman Sachs Equity Factor Index World Net TR comprised 626 constituents from 22 countries. Country and sector risk versus market capitalisation-weighted benchmarks are strictly controlled. The index is reviewed monthly and calculated independently by Russell Investment Group.
The Source Goldman Sachs Equity Factor Index World UCITS ETF will add to Source’s existing range of “beta plus” products.
“Investors are increasingly looking outside traditional market cap benchmarks for an enhanced return. Academic research recognises the importance of combining equity factors but before this listing there was no way of harnessing their combined ability to deliver outperformance using an ETF,” says Source CEO Ted Hood. “We have seen meaningful flows into our value-added ‘beta plus’ products in 2013 and are delighted to be expanding our product range.”
The Source Goldman Sachs Equity Factor Index World UCITS ETF trades on the London Stock Exchange in USD. The management fee is 0.65 per cent per annum.