ETF Securities (ETFS) has launched two new Exchange Traded Funds (ETFs) based on Scientific Beta’s multi-factor, multi-strategy indices.
The new ETFs are the ETFS Diversified-Factor US Large Cap Index Fund (SBUS) and the ETFS Diversified-Factor Developed Europe Index Fund (SBEU). Both products are listed on the New York Stock Exchange (NYSE).
Scientific Beta is an index provider specialising in smart beta solutions and is part of the EDHEC Risk Institute, an entity that works closely with institutions to implement academic research and improve their investment and risk management process.
Scientific Beta has developed smart beta solutions to address simultaneously the two primary issues of market cap weighted indices, i.e. exposure towards non-performing market factors and lack of diversification1. This comprehensive approach differs from most of the other smart beta indices which focus on either one of the issues, and generally results in sub-optimal risk/return performances.
Scientific Beta indices select stocks based on factors well documented by academic research (low volatility, valuation, momentum and size) and use a proprietary weighting strategy to enhance the diversification, with the objective of providing better risk adjusted performances than other established benchmarks such as the S&P 500 and Stoxx Europe 600.
These two new products further expand the investment options offered to the ETF Securities customer base in the United States. We are dedicated to working with our customers to develop new solutions that help them better manage and diversify their portfolios.
Mike McGlone, Director of Research at ETF Securities US, commented: “We are very proud to collaborate with Scientific Beta and bring to market the latest academic research with regard to smart beta indices. Private investors now have access to solutions previously only available to large institutions, through ETFs that track indices whose methodology is fully transparent.”
Eric Shirbini, Global Product Specialist with ERI Scientific Beta, added: “The Scientific Beta Multi-Beta Multi-Strategy Equal Weight Indexes allow equity investors to expand their opportunity set beyond the standard equity premium. Within each factor tilt, ERI Scientific Beta applies smart weighting methodologies to selected stocks so that the indices are not only exposed to the relevant factor, but also well diversified. We are delighted that ETF Securities have decided to make the US and Developed Europe versions of these indexes available to US investors through the attractive medium of ETFs.”
