UBS Global Asset Management (UBS GAM) has listed eight ‘smart beta’ exchange-traded funds (ETFs) on the London Stock Exchange that offer exposure to investment factors in the US and Eurozone equity markets.
The eight ETFs target four factors: prime value, low volatility, quality and total yield. Four target these factors in the US, and four target the factors in the Eurozone.
The factors are derived from MSCI USA and MSCI EMU indices – two separate currency regions because, says UBS GAM, studies have shown that factor portfolios that are not influenced by currency movements stand out more clearly when compared with portfolios from different currency zones.
The firm says historical analysis of sources of risk and returns on equity investments has shown that particular factor-based portfolios have outperformed the broad market in the long-run.
Andrew Walsh, head of UBS ETF sales UK & Ireland, says: "Whether one chooses to call it 'factor investing', 'smart beta' or 'alternative beta', what is very clear is that this category continues to gain increased interest from investors who are looking beyond the traditional parameters of market-cap weighted benchmarks.”
He says that UBS GAM is starting to see a shift from a 'core-satellite' investment approach to a 'core-factor-satellite' approach.
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