New offering from Think ETFs tracks equal-weighted index of US equities

Nov 17th, 2015 | By | Category: Equities

Think ETFs, a Dutch provider of exchange-traded funds, has launched the Think Morningstar North America Equity UCITS ETF (TNAE) on the NYSE Euronext Amsterdam.

New offering from Think ETFs tracks equal-weighted index of US equities

Martijn Rozemuller, Managing Director at Think ETFs.

The fund tracks Morningstar’s proprietary North America 100 Equal Weight Index, offering equal-weighted exposure to the 100 largest and most liquid stocks trading on North American exchanges.

Martijn Rozemuller, managing director at Think ETFs, said: “Morningstar is a global investment research provider whose mission is to help investors reach their financial goals. Morningstar has seen strong adoption of its indices in the United States, and I am particularly excited that our new North America ETF will be based on a Morningstar index.”

Recent research from Cass Business School showed that strategies which deviate from traditional market cap-weighted approaches have historically produced superior risk-adjusted returns by tilting portfolio exposures towards companies which offer value characteristics as well as smaller cap companies. Equally-weighted strategies avoid one of the potential flaws in market cap-weighted indices, increasing allocation to a company’s stock as its price and therefore valuation increases. By avoiding this rules-based pitfall, these strategies are less likely to adopt concentrated positions in stocks which may be overvalued.

Although these funds have historically produced superior risk-adjusted returns, investors should be aware that the volatility of such strategies has historically been higher than funds weighted according to market cap.

As of 13 November 2015, the fund has most of its exposure within US-listed firms (95.7%) with a small allocation to Canadian-listed stocks (4.3%). The major sector exposures are to consumer staples (17.4%), technology (16.9%), healthcare (16.7%), financial services (14.5%) and consumer discretionary (10.1%).

The fund, which trades in euros, is the second regional equity ETF from Think ETFs following the launch of the Think European Equity UCITS ETF (TEET) in October 2014. Both funds carry total expense ratios of 0.20% but Think ETFs has waived these management fees on the newly launched fund until January 2016.

According to latest figures from Deutsche Bank, Think ETFs now holds over €1.7bn in assets under management across their range of 13 passive funds.

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