FTSE Russell unveils new smart beta indices offering core US equity exposure

Dec 8th, 2015 | By | Category: ETF and Index News

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FTSE Russell, a global index provider, has launched a series of multi-factor smart beta indices which track a core allocation to US equities with a range of factor tilts designed to capture improved risk-adjusted returns. The rules-based design as these indices makes them an ideal candidate as the basis for index-tracking products such as exchange-traded funds.

FTSE Russell unveils new smart beta indices offering core US equity exposure

The latest multi-factor smart beta indices from FTSE Russell are designed as the basis for core US equity exposure.

The FTSE Russell Focused Factor Indices are based on the constituents of the US large-cap Russell 1000 Index and are available with either a dividend yield, low volatility or momentum factor tilt. The range is designed to meet the objectives of different investor types whether that be the need for income, reducing the variability of a portfolio or chasing after enhanced returns. Strategies based on these factors have, in the past, provided superior risk-adjusted returns over market capitalisation-weighted benchmarks.

In addition, each index benefits from factor diversification through additional tilts toward quality, value and size factors. A multi-factor approach such as this should provide the necessary factor diversification to smooth the time varying nature of the performance of single factor indices which can often go through temporary periods of underperformance.

State Street Global Advisors (SSGA), the asset management business behind the SPDR range of ETFs, has announced the launch of three new smart beta ETFs based on the new indices from FTSE Russell; the SPDR Russell 1000 Yield Focus ETF (ONEY), the SPDR Russell 1000 Momentum Focus ETF (ONEO) and the SPDR Russell 1000 Low Volatility Focus ETF (ONEV). The ETFs are listed on the NYSE Arca and each carry a 0.20% gross expense ratio.

Ron Bundy, CEO North America Benchmarks, FTSE Russell, said: “We are pleased to align with State Street Global Advisors to offer indices as the basis for new ETFs. Our new Focused Factor Indices draw on the extensive expertise of our FTSE Russell global index team and combine multiple factors to help investors meet their objectives.”

The three new indices from FTSE Russell are as follows:

The Russell 1000 Yield Focused Factor Index

The Russell 1000 Low Volatility Focused Factor Index

The Russell 1000 Momentum Focused Factor Index

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