Global X Launches Family Of Scientific Beta ETFs Tracking Indexes Developed By EDHEC-Risk Institute
Funds seek to outperform benchmark indexes at a fraction of the cost of active management
NEW YORK, May 13, 2015 /PRNewswire/ -- Global X Funds, the New York-based provider of exchange-traded funds (ETFs), today launched a family of four ETFs based on EDHEC-Risk Institute's Scientific Beta indexes:
Global X Scientific Beta US ETF (SCIU)
Global X Scientific Beta Europe ETF (SCID)
Global X Scientific Beta Japan ETF (SCIJ)
Global X Scientific Beta Asia ex-Japan ETF (SCIX)
The Scientific Beta ETFs provide core equity exposure to the U.S., Europe, Asia ex-Japan and Japan. The new funds may be considered alternatives to actively managed funds as they seek to outperform market cap-weighted indices at a fraction of the fees typically charged for active management. The funds seek to deliver outperformance by tracking academically driven multi-factor indexes developed by ERI Scientific Beta.
According to Morningstar, smart beta ETFs had $402 billion in assets at the end of 2014, up fourfold from $97 billion at the end of 20091. The first wave of smart beta strategies sought outperformance by providing exposure to a specific characteristic or factor, such as "value". Representing the next generation of smart indexing, the Scientific Beta ETFs capture four factors simultaneously: Value, Size, Momentum and Low Volatility. While each individual factor has historically outperformed the market in the long term, the Scientific Beta strategy seeks to smooth the cyclicality of their returns and deliver more consistent outperformance by combining the factors together.
A key to the Scientific Beta strategy is its unique weighting scheme which combines five different weighting strategies. Traditional market capitalization indexes are often plagued by lack of diversification because most of their exposure is concentrated in a few large names. At the same time, alternative weighting strategies utilized by most existing smart beta ETFs tend to inadvertently bias certain factors, such as equal weight strategies favoring small cap stocks. By combining five unique weighting schemes, the Scientific Beta ETFs seek to maximize diversification and minimize inadvertent factor tilts.
"ERI Scientific Beta's methodology has been developed over years of thorough academic research, but so far its use has been mostly limited to institutional investors," said Bruno del Ama, CEO of Global X Funds. "We are excited to bring this premier smart beta strategy to a broader audience through the ETF structure."
"We designed our multi-factor indices to give investors exposure to well-rewarded factors, while seeking to reduce unrewarded risks through diversification," added Eric Shirbini, Global Product Specialist at ERI Scientific Beta. "Our academic approach has resulted in creating one of the most robust smart factor indices on the market."
ABOUT GLOBAL X FUNDS
Global X is a New York-based sponsor of exchange-traded funds (ETFs), offering access to investment opportunities across global markets. Founded in 2008, Global X is recognized by individual and institutional investors for its suite of income, international, commodity and alternative funds. With over 40 funds available across U.S. and foreign exchanges, Global X is one of the fastest growing issuers of ETFs. For more information, please visit www.globalxfunds.com.
ABOUT ERI SCIENTIFIC BETA
Launched in December 2012, EDHEC-Risk Institute Scientific Beta is an original initiative which aims to favor the adoption of the latest advances in "smart beta" design and implementation by the whole investment industry. Its academic origin provides the foundation for its strategy: offer, in the best economic conditions possible, the smart beta solutions that are most proven scientifically with full transparency of both the methods and the associated risks.
Carefully consider a fund's investment objectives, risks, and charges and expenses. This and other information can be found in the fund's summary or full prospectus, which can be obtained by calling 1-888-GX-FUND-1 (1.888.493.8631) or by clicking here for the prospectus. Please read the prospectus carefully before investing.
Investing involves risk, including the possible loss of principal. In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. The Funds are non-diversified. For the Scientific Beta Japan ETF, the Japanese economy may be subject to considerable degrees of economic, political and social instability, which could have a negative impact on Japanese securities. In addition, Japan is subject to the risk of natural disasters, such as earthquakes, volcanoes, typhoons and tsunamis, which could negatively affect the Fund.
Shares of Global X Funds are bought and sold at market price, not NAV, and are not individually redeemed from the fund. Buying and selling shares will result in brokerage commissions.
Global X Management Company, LLC serves as an advisor to the Global X Funds. The Funds are distributed by SEI Investments Distribution Co., which is not affiliated with Global X Management Company, LLC.
Diversification may not protect against market risk. There is no assurance the goals of the strategy discussed will be met.
EDHEC Risk Institute Asia Ltd. indexes have been licensed for use by Global X Management Company, LLC. Global X Funds are not sponsored, endorsed, issued, sold, or promoted by EDHEC Risk Institute Asia Ltd. nor does this company make any representations regarding the advisability of investing in the Global X Funds.
1 http://news.morningstar.com/articlenet/article.aspx?id=679391
SOURCE Global X Funds
Share this article