The Ireland-domiciled exchange-traded fund is aimed at more conservative, US-focused investors seeking long-term returns.
Exchange-traded fund provider Source and Risk Based Investment Solutions, part of the Rothschild group, have launched an ETF that aims to provide broad US equity exposure with lower volatility than traditional market-cap weighted investments.
The Source RBIS Equal Risk Equity US UCITS ETF tracks the R Risk-Based US Equity Index. The largest 500 US stocks are eligible for inclusion. From this, the 250 stocks with the lowest risk are selected. Stocks are then weighted such that they each contribute equal risk.
The index, which is rebalanced monthly and reviewed quarterly, has delivered 3 per cent lower volatility than the S&P 500 since January 2015 while outperforming that benchmark with annualised returns of 7.77 per cent versus 7.02 per cent.
The new fund is available in US dollars on the London Stock Exchange. It is Rothschild RBIS’s second product available as an ETF, the first being the Source R Equal-Risk European Equity UCITS ETF, which has attracted €137 million ($153 million) in assets since its launch in January last year.
“This product offers the same innovative and successful strategy as the European equity centered ETF but for US-focused investors. Most traditional constituent selection methods treat risk as an incidental consequence of the process: the Source RBIS Equal Risk Equity US UCITS ETF effectively turns the process around by using risk as an input,” said Catherine Adibi at RBIS.