Amundi launches two smart beta European equity ETFs

May 25th, 2016 | By | Category: Equities

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French exchange-traded fund provider Amundi ETF has launched two new smart beta European equity ETFs on Euronext Paris targeting momentum and quality factor exposures. The ETFs are designed to help investors perform their asset allocation choices and are cheaper than existing ETFs on the same underlying.

Amundi launches two new smart beta European equity ETFs

Fannie Wurtz, Managing Director at Amundi ETF, Indexing & Smart Beta.

The Amundi ETF MSCI Europe Momentum Factor UCITS ETF (MCEU) and the Amundi ETF MSCI Europe Quality Factor UCITS ETF (QCEU) offer exposure to the MSCI Europe Momentum Strategy Index and the MSCI Europe Quality Strategy Index, respectively.

The MSCI Europe Momentum Strategy Index includes large and mid-cap stocks from the MSCI Europe Index, showing the best performance during the last six and twelve months before the last index rebalancing date.

The MSCI Europe Quality Strategy Index enables investors to benefit from an exposure to quality growth large and mid-cap stocks form the MSCI Europe Index. Stocks are identified on the basis of three main fundamental variables: high return on equity, stable year-over-year earnings growth and low financial leverage.

Fannie Wurtz, Managing Director at Amundi ETF, Indexing & Smart Beta, commented in a statement: “Smart beta solutions and factor investing are some of the main investment trends we identify among European investors. We are delighted to announce these new listings today, as the development of a full range of mono and multi-factor smart beta exposures is in line with our strategy to offer a comprehensive toolbox of smart beta solutions to investors to perform their asset allocation choices, at competitive pricing.”

Factor-based ETFs seek to provide market beating performance by explicitly capturing specific risk premia. Research has shown that tilts towards factors such as size, value, momentum, low volatility, quality, and dividends have historically been able to beat the broad market over the long term. It was also found however that each factor exhibited relatively low correlations to each other, suggesting investors may be able to smooth the volatility of their return by building portfolios containing several factor-based ETFs. Amundi’s range of single-factor ETF exposures on European equities now consists of quality, momentum, size, value, low volatility, and dividends.

The ETFs are all offered with total expense ratios of 0.23% after Amundi cut fees across the entire range.

They will be directly competing with a range of smart beta European equity ETFs from iShares that also utilize the MSCI indices as their benchmarks. These include the iShares Edge MSCI Europe Momentum Factor UCITS ETF (IEMO) which is down 4.89% year-to-date (23 May 2016) and the iShares Edge MSCI Europe Quality Factor UCITS ETF (IEQU) which is down 4.50% YTD. Each fund charges a TER of 0.25%.

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