Daily ETF Watch: Eurozone Fund Debuts

October 22, 2014

Two new ETFs are launching today on the BATS exchange and the Nasdaq exchange. Both implement quantitative strategies.

Newcomer Launches First ETF

The ValueShares U.S. Quantitative Value ETF (QVAL) from ETF newcomer Alpha Architect, a firm that has previously focused on separately managed accounts, is actively managed according to the firm’s quantitative model. The fund will screen potential holdings based on forensic-accounting standards, valuations and quality characteristics.

Its portfolio will consist of approximately 50, mostly large-cap, U.S. equities.

The fund has an expense ratio of 0.79 percent, or $79 for each $10,000 invested. Its primary listing is on the BATS exchange.

First Trust Rolls Out Eurozone Fund

Meanwhile, the First Trust Eurozone AlphaDex ETF (FEUZ) is making its debut on the Nasdaq exchange. The fund joins 38 other First Trust funds that implement the firm’s smart-beta AlphaDex methodology. The suite of enhanced-beta ETFs has nearly $15 billion in assets under management.

First Trust launched the First Trust Europe AlphaDex ETF (FEP |C) in 2011, which has European holdings in and outside of the eurozone. The fund currently has more than $514 million in assets under management. FEUZ and FEP both come with an expense ratio of 0.80 percent.

First Trust’s AlphaDex funds are based on a quantitative approach that targets growth and value factors, with components separated into quintiles based on their attractiveness. Components within each quintile are equally weighted.

The eurozone has been getting more attention lately, notably when Source launched its first U.S.-listed ETF just a few weeks ago. That fund, the Source Euro Stoxx 50 ETF (ESTX), tracks one of the best-known blue chip indexes covering large-cap eurozone equities. However, the methodology for ESTX’s underlying benchmark is fairly plain vanilla.

 

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