Source and Goldman Sachs expand range of smart beta ETFs

Jan 30th, 2015 | By | Category: Equities

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Source, one of Europe’s leading providers of exchange-traded funds, has announced the launch of the Source Goldman Sachs Equity Factor Index Europe UCITS ETF, the second Source ETF to be launched that provides access to Goldman Sachs’ innovative series of multi-factor “smart beta” indices.

Source and Goldman Sachs expand range of smart beta ETFs

Michael John Lytle, Chief Development Officer, Source.

The fund, which has been listed on the London Stock Exchange and Deutsche Börse, follows the success of the Source Goldman Sachs Equity Factor Index World UCITS ETF, which has attracted assets of approximately $400 million since its launch in 2014.

The underlying index, the Goldman Sachs Equity Factor Index Europe Net TR, offers broad long-only European equity exposure, emphasising five well-known equity market factors:  size, value, momentum, quality and low beta. It aims to deliver consistent outperformance versus European market cap benchmarks, on an absolute and risk-adjusted basis.

Michael John Lytle, Chief Development Officer at Source, said: “Smart beta funds have proven successful in certain markets, providing investors with the potential to generate better returns than the more common market-cap weighted benchmarks, particularly on a risk-adjusted basis. The Goldman Sachs series of factor-based indices are unique in that they offer exposure to multiple factors, rather than just the one or two that are applied to many other funds on the market.”

Jerome Brochard, Managing Director within the Global Fund Products and Systematic Trading Strategies team at Goldman Sachs, added: “Building on from the success of our EFI World index in 2014, we are expanding our family of multi-factor indices to offer regional exposures, starting with Europe. Over the last year, we have continued to see increased appetite from investors searching for enhanced equity returns, and this ETF launch offers them regional access to our innovative smart beta approach in a liquid and transparent wrapper.  Investors have appreciated our careful portfolio construction around the five equity factors that we implemented in our global product, and we are using the same proven methodology here.”

As of 31 December 2014, the Goldman Sachs Equity Factor Index Europe Net TR comprised 231 constituents from 15 countries. Country and sector risk versus market capitalisation-weighted benchmarks are strictly controlled.  The index is reviewed monthly and calculated independently by Russell Investment Group.

The fund is available in EUR on the Deutsche Börse (SMLU) and in GBP on the London Stock Exchange (EFIE). It has a management fee of 0.55% per annum.

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