Daily ETF Watch: More Multifactor Funds

Global X rolls out four ETFs tracking multifactor indexes from Edhec Risk.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

Today Global X jumped into the world of smart beta with both feet, rolling out four multifactor ETFs covering a variety of market segments.

 

Those funds, their tickers and expense ratios are as follows:

  • Global X Scientific Beta US ETF (SCIU), 0.35 percent, or $35 for each $10,000 invested
  • Global X Scientific Beta Europe ETF (SCID), 0.38 percent
  • Global X Scientific Beta Japan ETF (SCIJ), 0.38 percent
  • Global X Scientific Beta Asia ex-Japan ETF (SCIX), 0.38 percent

 

All four made their debut on the NYSE Arca exchange. The fifth fund in the family, the Global X Scientific Beta Developed Markets ex-US ETF, remains in registration and has not yet been assigned a ticker or exchange, but the most recent filing indicates it will have an expense ratio of 0.38 percent.

 

The funds track indexes from Edhec’s Scientific Beta unit and target four factors: value, size, low volatility and momentum. Each factor is weighted according to five different weighting approaches that are then averaged for each factor. The five weighting schemes are equal weighting; maximum de-correlation; efficient minimum volatility; efficient maximum Sharpe ratio; and diversified risk-weighted.

 

Multifactor funds are cropping up all over these days. Earlier this year, ETF Securities, rolled out two multifactor ETFs tracking Scientific Beta indexes that have a similar approach. State Street Global Advisors launched its own family of ETFs tracking MSCI’s Quality Mix indexes late last year, and iShares just unveiled its own family of four-factor ETFs tracking MSCI indexes.

 

More Funds On The Way

Recent filings from Lattice and Deutsche Bank indicate that certain products may be launching soon—a new Japan-focused fund for Deutsche and a real estate fund for Lattice.

 

Deutsche Bank’s Pending Japan Fund
The latest filing for the Deutsche X-trackers Japan JPX-Nikkei 400 Equity ETF offers considerably more color than a previous version. In addition to providing the fund’s full name (versus simply the “Deutsche X-trackers Japan ETF” previously), it provides a ticker, JPN, and an expense ratio of 0.48 percent.

 

The fund covers issues listed on the Jasdaq Stock Exchange and the Tokyo Stock Exchange including large-caps, midcaps and high-growth or “emerging” stocks, according to the prospectus. The index’s methodology selects its 400 components based on their scores in the areas of return on equity, cumulative operating profit and current market value.

 

The fund will list on the NYSE Arca, but no launch date has been announced.

 

Lattice To Add Real Estate Fund
Lattice rolled out its first four ETFs earlier this year, and it looks like a real estate fund is the next one that will hit the market.

 

The Lattice Real Estate Strategy ETF (RORE) comes with an expense ratio of 0.45 percent. Its underlying index, the Lattice Risk-Optimized Real Estate Strategy Index, targets the value, momentum and quality factors, while seeking to control its exposure to volatility and other risks, such as those associated with concentrations in a particular country, sector or holding.

 

The fund is slated to list on the NYSE Arca, though it’s not clear how soon.

 

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.