Daily ETF Watch: DB Plans Smart Beta Funds

Deutsche Bank to join the smart-beta ETF wave.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

Aside from some recently launched high-dividend yield funds, Deutsche Bank has mainly stayed out of the smart-beta ETF mania, but it looks like that’s going to change. A recent filing outlines the firm’s plans for three “Enhanced Beta” funds that will track multifactor indexes from the recently merged FTSE and Russell families, with the U.S. fund derived from the Russell 1000 Index and the international funds derived from FTSE indexes.

 

The three proposed funds are as follows:

  • Deutsche X-trackers Russell 1000 Enhanced Beta ETF
  • Deutsche X-trackers FTSE Developed ex US Enhanced Beta ETF
  • Deutsche X-trackers FTSE Emerging Enhanced Beta ETF

 

The “Enhanced Beta” methodology will score each company in an index’s selection universe based on five factors: value, momentum, quality, low volatility and size. The methodology then selects the highest-scoring companies on a composite basis.

 

Perhaps the most notable multifactor funds are those offered by iShares and State Street Global Advisors. The iShares FactorSelect ETFs track MSCI indexes that target the quality, momentum, value and size factors. Meanwhile, the SPDR Quality Mix ETFs also track MSCI indexes, but they focus on the value, low-volatility and quality factors.

 

The FTSE classification system, it should also be noted, includes both South Korea and Israel as developed markets, which differs from other index providers that may classify those countries as emerging.

 

The filing did not include tickers or expense ratios.


Contact Heather Bell at [email protected].

 

 

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.