Viking Beta

Sweden

Smart beta in the land of longships and vikings

Sweden’s small but growing smart beta ETF market is getting one ETF larger thanks to a new listing from Nordea, the Scandinavian financial conglomerate. The Nordea SmartBeta Eurozone Equity UCITS ETF (XGOSBEZI) will track three factors across eurozone equity markets: momentum, dividends and “beta”. Our Google Translate reading of the Swedish website leads us to think the fund will target high beta stocks and that “dividends” is being used as a proxy for value. (Website here, for Swedish readers or those with spare time). The fund will include an ESG screen, which rules out poorly behaving eurozone companies. We presume the ESG screen is included to keep Scandinavian pension funds – which can be quite strict on ESG filters – happy.

 

Switzerland, Germany

UBS lists multi-factor EM debt ETF

UBS is listing a new emerging market local currency debt ETF that uses a factor screen to select which debts to buy. The UBS ETF – JP Morgan EM Multi-Factor Enhanced Local Currency Bond UCITS ETF (EMLOC) will track the JP Morgan EM Multi-Factor Enhanced Local Currency Bond Index, for which we cannot find a factsheet at present.

 

The product will tap into the European passion for EM debt ETFs, which have taken in more than $15 billion assets across the UK, France, Germany, Switzerland. While EM debt ETFs are dime a dozen, what’s interesting about this ETF is that it will use a factor screen for its EM debts. We aren’t sure what those factors will be (again, no factsheet), but from our vaguely-remembered reading of French-Fama we imagine they might be maturity and default risk?

 

What’s also about this fund is that it will use local currencies, which has come at an interesting time considering how strong the dollar has been. The only other fund provider to provide such an ETF is VanEck, which has $50m in its VanEck Vectors J.P. Morgan Emerging Markets Local Currency Bond UCITS ETF.

 

USA

Vanguard lists total world bond ETF of ETFs

Vanguard is listing a new bond ETF that offers exposure to the world investment grade bond market, in a manner analogous to its world corporate bond ETF (VTC). The Vanguard Total World Bond ETF (BNDW) will be structured as an ETF of ETFs, investing directly in two Vanguard ETFs: Vanguard Total Bond Market ETF (BND) and Vanguard Total International Bond ETF (BNDX).

 

According to Vanguard, the advantage of using this structure is that it allows the new fund “to achieve immediate scale by using existing exposure from the underlying ETFs and is expected to result in tighter bid/ask spreads and lower operating expenses than investing directly in the benchmark’s constituents.”

 

Cross-listings

London

First Trust Eurozone AlphaDEX UCITS ETF (FEUD)