First Trust enters Europe with smart beta ETFs

ETFsUS-based asset manager First Trust Advisors has entered the European market with three exchange-traded funds (ETFs) that employ alternative index strategies designed to beat conventional index returns.

The ETFs are based on the FTSE 100, S&P 500 and MSCI Emerging Markets indices, respectively, but incorporate a rules-based ranking system designed to prioritise the best stocks.

“The stocks are ranked according to value and growth factors, rather than market cap,” says Eric Anderson, First Trust's vice president.

The idea is that the customised indices will outperform the indices they are based on, an approach often described as smart beta.

“Every step in the process is driven by a transparent, repeatable quantitative process,” he adds.

The funds are listed on the London and Irish stock exchanges and structured under an Irish Ucits IV company. They are from First Trust's AlphaDEX range, which have been on sale in the US for three years.

First Trust Advisors looks after $10.6 billion (€8.1 billion) of ETF assets out of a total of $72 billion under management, as of March 31.

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