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Deutsche Asset Management adds fourth fund to Comprehensive Factor ETF suite


Deutsche Asset Management (Deutsche AM) has launched the Deutsche X-trackers Russell 2000 Comprehensive Factor exchange traded fund (ETF) (DESC), the fourth ETF to be added to its multifactor suite. 

The new fund seeks to track the Russell 2000 Comprehensive Factor Index. The FTSE Russell family of Comprehensive Factor Indices is designed to track the equity market performance of companies that have demonstrated relatively strong exposure to targeted investment style factors: value, momentum, quality, low volatility and size.

“Smart beta strategies provide investors the potential for increased or enhanced returns, lower risk possibilities and diversification improvement by shifting from industry and country diversification to factor diversification,” says Fiona Bassett, Head of Passive Strategy in the Americas. “DESC, focusing on small cap US stocks, is a logical addition to our Deutsche X-trackers Comprehensive Factor ETFs suite, which is based on an intelligently designed index construction mechanism that takes into account five investment factors. Academic research has identified certain stocks’ characteristics that are important in explaining a stock’s risk and performance. Emphasising these factors can potentially make a significant contribution to outperforming traditional market-capitalisation weighted benchmark indices.”

Deutsche AM rolled out its US multi-factor suite late last year with the Deutsche X-trackers Russell 1000 Comprehensive Factor ETF (Ticker: DEUS) and the Deutsche X-trackers FTSE Developed ex US Comprehensive Factor ETF (Ticker: DEEF). The suite was expanded with the launch of Deutsche X-trackers FTSE Emerging Comprehensive Factor ETF (Ticker: DEMG) earlier this year. DESC follows the same investment methodology as the three previously-launched funds applied to the small cap US stock universe.

”We’re so glad to be able to extend our collaboration with Deutsche Asset Management to offer more smart beta investment alternatives to investors,” says Ron Bundy, CEO North America Benchmarks for FTSE Russell. “Our global research team is at the forefront of innovation in index-based market factor analysis, and we are now extending our comprehensive factor methodology to the Russell 2000 Index, long recognised as the definitive measure of US small-cap stocks.”

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