Virtus launches emerging markets multi-factor ETF

Nov 13th, 2017 | By | Category: Equities

Sector & Thematic Strategy Briefing - Wednesday 29th March 2023 - The Berkeley, London Please join us for our annual sector and thematic investing event, featuring DWS Xtrackers, First Trust, MSCI, Redburn and Sprott Asset Management. Please register now if you would like to attend.

Virtus ETF solutions has launched the Virtus Glovista Emerging Markets ETF (EMEM US) on the NYSE Arca. Similar to other Virtus ETFs, the fund’s investment strategy comes from a sub-advisor, in this case Glovista, and employs a quantitative multi-factor strategy to provide exposure to ‘favoured’ emerging markets.

William J. Smalley, executive managing director and head of product strategy and management, Virtus ETF Solutions.

William J. Smalley, executive managing director and head of product strategy and management, Virtus ETF Solutions.

William Smalley, executive managing director of Virtus, commented: “With the launch of the Virtus Glovista Emerging Markets ETF, we can offer investors exposure to the surge in global economic growth, leveraging the specialized knowledge and quantitative skills of Glovista Investments in a passive, tax-efficient vehicle. We know emerging markets can be challenging, but by systematizing Glovista’s flagship EM strategy, we believe the fund will be well positioned to mitigate the geopolitical risks and uncertainties that often come with investments.”

The ETF tracks the Solactive Most Favored Nations Emerging Markets Index. Solactive developed the index based on global quantitative and technical models provided by Glovista. Specifically, the index represents the aggregation of multiple models that capture macroeconomic trends (50% weight), bottom-up company-specific dynamics (30% weight) and relative price momentum dynamics (20% weight).

Carlos Asilis, co-founder and CIO of Glovista, commented: “Our global macro philosophy emphasizes choosing countries and currencies within the sector as opposed to relying on stock selection to achieve long-term returns. This approach allows us to aggregate multiple models that capture macroeconomic trends, bottom-up fundamental analytics, and relative price momentum dynamics.”

Each country in the index is represented, at most, by the 50 largest stocks listed in the country. The index caps the portfolio weight of each single country at 10%. According to Solactive, this capping provides much broader exposure to emerging markets compared to market-cap weighted indices, which often have large exposures to China, South Korea and Taiwan.

Darshan Bhatt, deputy CIO of Glovista Investments, commented: “We believe this fund provides a uniquely powerful vehicle to gain exposure to emerging market equities as the approach seeks to capitalize on the large dispersion of returns across EM countries, unconstrained by the narrow set of countries that dominate market capitalization weighted benchmarks.”

Timo Pfeiffer, head of research at Solactive AG, commented: “The Solactive Most Favored Nations Emerging Markets Index allows investors to gain access to emerging markets that present favorable economic data based on Glovista’s systematic model of country selection. By assessing macro- and microeconomic performance, the model assigns weight to each country’s basket of stocks, overweighting those countries that exhibit a superior economic outlook.”

The fund has a total expense ratio of 0.68%.

Tags: , , , , , , , ,

Leave a Comment