Deutsche Asset Management (Deutsche AM) is pitching among US retail investors the Deutsche X-trackers Russell 2000 Comprehensive Factor exchange traded fund (ETF), the fourth ETF to be added to its multifactor suite.
The new fund tracks the Russell 2000 Comprehensive Factor Index, which makes part of the FTSE Russell family of comprehensive factor indices, a series designed to track the equity market performance of companies that have demonstrated relatively strong exposure to targeted investment style factors: value, momentum, quality, low volatility and size.
The new ETF, focusing on small cap US stocks, is a logical addition to Deutsche X-trackers Comprehensive Factor ETFs suite, which is based on an "intelligently designed index construction mechanism" that takes into account five investment factors, according to Fiona Bassett (pictured), head of passive strategy in the Americas.
"Smart beta strategies provide investors the potential for increased or enhanced returns, lower risk possibilities and diversification improvement by shifting from industry and country diversification to factor diversification," said Basset, in a statement. "Academic research has identified certain stocks' characteristics that are important in explaining a stock's risk and performance. Emphasizing these factors can potentially make a significant contribution to outperforming traditional market-capitalization weighted benchmark indices"
Deutsche AM rolled out its US multifactor suite late last year with the Deutsche X-trackers Russell 1000 Comprehensive Factor ETF and the Deutsche X-trackers FTSE Developed ex US Comprehensive Factor ETF. The suite was expanded with the launch of Deutsche X-trackers FTSE Emerging Comprehensive Factor ETF earlier this year. The new tracker fund follows the same investment methodology as the three previously-launched funds applied to the small cap US stock universe.
Ron Bundy, CEO North America Benchmarks for FTSE Russell said the index provider's global research team continues to be at the forefront of innovation in index-based market factor analysis, and that FTSE Russell is expanding its factor methodology to the Russell 2000 Index.
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