RBC iShares rolls out five US single-factor ETFs on TSX

Sep 11th, 2019 | By | Category: Equities

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RBC iShares, the joint venture between RBC Global Asset Management and BlackRock Canada, has launched five new ETFs on Toronto Stock Exchange.

Pat Chiefalo, Managing Director, Head of iShares, BlackRock Canada

Pat Chiefalo, Managing Director, Head of iShares, BlackRock Canada.

The funds provide exposure to US equities while targeting factor returns from quality, momentum, value, or size (small-cap) risk premia.

Pat Chiefalo, Managing Director, Head of iShares, BlackRock Canada, commented, “We know that modern portfolio construction is evolving as investors increasingly look across a range of strategies to achieve their investment objectives.

“Factor investing is playing a crucial part in this evolution, as advancements in data and technology have made it easier for investors to implement their views on the areas of the market they believe will outperform, in a low-cost, transparent way.”

Quality, momentum, value

The quality, momentum, and value funds are the iShares Edge MSCI USA Quality Factor Index ETF (XQLT CN), the iShares Edge MSCI USA Momentum Factor Index ETF (XMTM CN), and the iShares Edge MSCI USA Value Factor Index ETF (XVLU CN).

The funds each come with an expense ratio of 0.33% are linked to MSCI factor indices that provide exposure to the large and mid-cap segments of the US equity market.

The methodology first allocates a factor score to all constituents in the selection universe. These scores are then standardized within each sector to produce sector-relative factor scores. Each index then selects a fixed number of stocks with the highest factor scores. Constituents are weighted by the product of their market capitalization and factor scores.

Small-cap

The other two funds include a US small-cap ETF and a currency-hedged version of the same product. They are the iShares S&P US Small-Cap Index ETF (XSMC CN) and the iShares S&P US Small-Cap Index ETF (CAD-Hedged) (XSMH CN). Both funds come with expense ratios of 0.20%.

The ETFs are linked to the S&P SmallCap 600 Index, a well-known gauge for the US small-cap market. The index consists of the 600 largest US-listed stocks outside of the large-cap S&P 500 and the mid-cap S&P MidCap 400 indices.

The new launches complement RBC iShares’ existing line-up of factor-based US equity ETFs which includes minimum volatility, high dividend, quality dividend, dividend growers, and multi-factor products. These funds come with expense ratios ranging between 0.16% and 0.51%.

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