First Asset launches international risk-weighted ETF

Aug 29th, 2017 | By | Category: Equities

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First Asset Investment Management has launched the First Asset MSCI International Low Risk Weighted ETF on the Toronto Stock Exchange, providing exposure to a portfolio of low volatility equities from developed international countries.

First Asset launches international risk-weighted ETF

The fund seeks to provide broad exposure similar to the MSCI EAFE Index with lower volatility and market drawdowns.

The fund tracks the MSCI EAFE Risk Weighted Top 175 Index which is based upon the traditional market cap-weighted parent index, the MSCI EAFE Index which includes large and mid-capitalization stocks within developed markets outside of North America.

The index methodology selects the 175 securities from MSCI EAFE’s 926 constituents which have the lowest historical variance and weights them by the inverse of their price volatility. The index tends to have a bias towards lower size stocks and historically has exhibited lower realized volatility in comparison to its parent index – over the past five years the index has exhibited a 10.5% annualized standard deviation, compared to 10.8% for the MSCI EAFE Index. The index has underperformed the MSCI EAFE Index over that period however, returning 13.0% per annum compared to 14.0% for MSCI EAFE.

As of the end of July, the index’s largest country exposures are to Australia (15.3%), the UK (12.8%), Singapore (11.9%), Hong Kong (10.6%) and Switzerland (9.5%). The largest sector exposures are to industrials (19.4%), real estate (18.1%), financials (16.5%), consumer staples (15.7%) and utilities (10.5%).

Rohit Mehta, president, First Asset Investment Management, commented: “Today we expand our suite of MSCI index-based ETFs to include the First Asset MSCI International Low Risk Weighted ETF. MSCI is a market leader in global equity indices and has approximately $1.9 trillion in assets benchmarked to the MSCI EAFE index suite. This new ETF allows advisors to participate in the growing opportunity set available within the international equity market in a manner that seeks to minimize both volatility and the impacts of market drawdowns.”

The fund will trade under the ticker symbols RWX and RWX.B. RWX are Canadian dollar hedged units and RWX.B are unhedged units. Each share class has a management fee of 0.60%.

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