Russell Close To Launching Int’l Beta Funds

October 28, 2011

Russell is close to expanding its lineup of intelligent beta ETFs with five international offerings.

Russell Investments, the money management firm that rolled out its first ETFs in May, appears to be on the verge of rolling out five international versions of U.S. factor-based funds it already rolled out.

In a regulatory filing outlining the funds, Russell identified the funds’ tickers as well as their prices, which often indicates an ETF’s launch is nearing, if not imminent. The five funds, which all have net annual net expense ratios of 0.25 percent, are:

  • Russell Developed ex-U.S. Low Beta ETF (NYSEArca: XLBT)
  • Russell Developed ex-U.S. High Beta ETF (NYSEArca: XHBT)
  • Russell Developed ex-U.S. Low Volatility ETF (NYSEArca: XLVO)
  • Russell Developed ex-U.S. High Volatility ETF (NYSEArca: XHVO)
  • Russell Development ex-U.S. High Momentum ETF (NYSEArca: XHMO)

 

The five international funds, which Russell originally registered in July, are “intelligent beta” products that go beyond the plain-vanilla market-capitalization-weighted funds that comprise most of the $1.1 trillion in U.S.-listed exchange-traded products. Such smart beta products cherry-pick securities with certain characteristics—beta, volatility and momentum, in the case of the five international funds discussed in the filing.

According to the prospectus, the five funds will be passively managed and will normally invest 80 percent of their total assets in common stocks that comprise their respective Russell indexes.

And as is common with U.S. ETFs that track foreign stocks, some of the assets in the Russell ETFs can be in the form of depository receipts, which offer greater liquidity, but that can also introduce larger tracking errors. According to the filing, the tracking error isn’t likely to be more than 5 percent.

Russell noted that the expense ratios on the funds reflect a waiving of 0.34 percent in management fees until July 29, 2014.

Russell launched 10 similar funds focused on the U.S. in late May—five based on the Russell 1000 Large-Cap Index and five based on the Russell 2000 Small-Cap Index.

 

 

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