ETF Securities Expands Equity ETF Lineup With Two More New Funds
ETF Securities is expanding its line of factor-based equity ETFs. A closer look at the two new smart-beta, index-based ETFs. Based off ERI Scientific Beta indexing methodologies. ETF Securities, the London-based exchange-traded funds issuer known primarily for its lineup of commodities funds, is again adding to its lineup of U.S.-listed equity-based offering with the debuts of the ETFS Diversified-Factor U.S. Large Cap Index Fund (NYSEARCA: SBUS ) and the ETFS Diversified-Factor Developed Europe Index Fund (NYSEARCA: SBEU ) . ETF Securities is partnering with ERI Scientific Beta on the new ETFs. Scientific Beta is an index provider specializing 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, according to a statement . Scientific Beta’s stock selection process includes emphasizing investment factors, such as volatility, valuation, momentum and size. Factor-based funds are one of the fastest-growing segments of the ETF universe. The quality factor alone is the cornerstone of nearly 30 ETFs and issuers continue to bring an array of factor-driven ETFs to market. Since the start of 2015, JPMorgan introduced the JPMorgan Diversified Return Emerging Markets Equity ETF (NYSEARCA: JPEM ) , a multi-factor emerging markets ETF while iShares added two international ETFs to its factor-based suite. The ETFS Diversified-Factor U.S. Large Cap Index Fund tracks the Scientific Beta United States Multi-Beta Multi-Strategy Equal Weight Index, which “uses a proprietary weighting strategy to provide well diversified exposure, by combining 5 models: Maximum Deconcentration, Maximum Decorrelation, Efficient Minimum Volatility, Efficient Maximum Sharpe Ratio, and Diversified Risk Weighted,” according to ETF Securities . Financial services is the largest sector weight in SBUS at 19.2% followed by consumer cyclicals at 13.9%. No stock accounts for more than 0.72% of the new ETF’s weight. Top 10 holdings include CareFusion (NYSE: CFN ), Annaly Capital (NYSE: NLY ) and Dow component Merck (NYSE: MRK ). The ETFS Diversified-Factor Developed Europe Index Fund tracks the Scientific Beta Developed Europe Multi-Beta Multi-Strategy Equal Weight Index, which “is composed of the 700 largest and most liquid stocks listed in the following countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom,” according to ETF Securities . The ETF currently holds 476 stocks, nearly a third of which are U.K. companies. France and Germany combine for over 23% of the new ETF’s weight. Top sector weights include 22.6% to financial services, 17% to industrials and 13.3% to consumer cyclicals. Both new ETFs charge 0.4% per year. SBUS and SBEU debuted on the heels of ETF Securities’ initial forays into U.S.-listed equity ETFs. Those ETFs, the ETFS Zacks Earnings Large-Cap U.S. Index Fund (NYSEARCA: ZLRG ) and the ETFS Zacks Earnings Small-Cap U.S. Index Fund (NYSEARCA: ZSML ) launched last week. ETF Trends editorial team contributed to this post.