Colombia Threadneedle Launches Two New Smart Beta ETFs
ETF Professor 7 years ago
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Colombia Threadneedle added to its lineup of alternatively-weighted exchange traded funds Wednesday with the debuts of two funds designed to be replacements for popular cap-weighted strategies.
What Happened
The issuer's newest ETFs are the Columbia Research Enhanced Core ETF (NYSE:RECS) and the Columbia Research Enhanced Value ETF (NYSE:REVS). RECS follows the Beta Advantage Research Enhanced U.S. Equity Index and can be used as an alternative to traditional Russell 1000 strategies.
RECS' “methodology leverages the results of Columbia Threadneedle Investments proprietary equity quantitative investment models to rate each company within the Russell 1000® Index based on quality, value and catalyst factors, and selects securities that are favorably rated. It is market cap-weighted and sector-neutral to the Russell 1000® Index,” according to the issuer.
RECS roster will typically consist of 325 to 400 stocks of large-cap U.S. growth and value companies. Top holdings in the new ETF include Microsoft Corp. (NASDAQ:MSFT) and Apple Inc. (NASDAQ:AAPL).
Why It's Important
REVS, the new value fund, debuts at a time when value stocks appear to be on the mend. That new ETF tracks the Beta Advantage Research Enhanced U.S. Value Index.
REVS' index “methodology leverages the results of Columbia Threadneedle Investments proprietary equity quantitative investment models to rate each company within the Russell 1000® Value Index based on quality, value and catalyst factors, and selects securities that are favorably rated. It is market cap-weighted and sector-neutral to the Russell 1000® Value Index,” according to the issuer.
REVS will usually hold 250 to 290 stocks of large-cap U.S. value companies. Six of the new ETF's top 10 holdings are members of the Dow Jones Industrial Average including JPMorgan Chase (NYSE:JPM) and Chevron (NYSE:CVX).
What's Next
“The ETFs aim to optimize equity exposure by eliminating stocks from the benchmark that are rated unfavorably by the Columbia Threadneedle quantitative research team,” said Colombia Threadneedle.
The new funds are built with advisors in mind that are looking to remove lagging stocks from passive funds. A Colombia Threadneedle advisor survey indicates nearly two-thirds of respondents are frustrated about not being able to remove lagging stocks from passive index funds and ETFs.
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