Virtus Unveils EM Strategy
Virtus is launching its 12th fund today with the rollout of the Virtus Glovista Emerging Markets ETF (EMEM). The fund tracks an index that is similar to an active strategy that global macro firm Glovista Investments offers to its institutional clients.
The fund comes with an expense ratio of 0.68% and lists on the NYSE Arca.
“We collaborated with Glovista to systematize their flagship strategy to introduce a tax-efficient and passive vehicle to retail investors,” said William Smalley, Virtus’ head of product strategy and management.
“This index reflects their global macro investment philosophy in that it seeks to identify emerging market stocks or opportunities in emerging market equities at the country level. It also seeks to limit downside by avoiding stocks in the weakest emerging market countries,” he added.
EMEM’s underlying index is updated on a monthly basis, during which it evaluates 15 of the largest and most liquid emerging markets, including China, Taiwan, South Korea, India, Malaysia, Indonesia, Thailand, Philippines, Russia, South Africa, Poland, Turkey, Brazil, Mexico and Chile.
From there, it selects 10 markets and invests in the 50 largest securities from each of those markets as long as they have $750 million in market capitalization and an average three-month daily trading volume of $500,000.
The methodology relies on three selection models to determine which markets it will target each month. The models, respectively, are based on macroeconomic trends, bottom-up company-specific dynamics and relative price momentum dynamics, the prospectus says.
“It’s not assessing opportunities at the single-stock level but rather at the country level, and then passively allocating to large and liquid stocks in each of those countries,” Smalley said of the strategy.
“The vast majority of this fund’s peers will have a beta objective. We think even though it is index-based, this can offer an alpha experience over the long run with passive implementation in a tax-efficient package. We think we’re kind of combining the best of both worlds here,” he noted.
As of Sept. 30, the index included 602 components, according to the document.
John Hancock Rounds Out Multifactor Suite
Finally, John Hancock is rounding out its family of multifactor ETFs with the launch of the John Hancock Multifactor Small Cap ETF (JHSC). The fund comes with an expense ratio of 0.50% and lists on the NYSE Arca.
Like the other John Hancock multifactor ETFs, JHSC tracks an index provided by Dimensional Fund Advisors. According to the prospectus, the index includes companies ranking below the 750th largest U.S.-listed company by market capitalization and excludes the smallest 4%.
Further, companies are targeted based on market-capitalization size, profitability and relative price. Individual companies see their individual weights capped at 4% of the index, the prospectus says.
JHSC’s addition to the John Hancock family of ETFs brings that total number of funds to 13.
Contact Heather Bell at [email protected]