April 26, 2012
Specialist ETF provider Ossiam is planning to expand its minimum variance family of ETFs to cover emerging markets.
Since launching the range last year, the issuer has introduced three funds that aim to cash in on the growing interest in low volatility strategies among investors, with the FTSE 100 minimum variance ETF the most recent addition in January.
The other two products in the suite are Europe and US-focused—the iSTOXX Europe Minimum Variance NR ETF and the US Minimum Variance NR ETF—and the Emerging Markets Minimum Variance NR ETF represents its first attempt to apply the strategy to more developing markets.
Bruno Poulin, CEO of Ossiam, said: “This new fund is targeted at investors who want exposure to emerging markets growth as part of their portfolio, but are wary of high volatility and risk. The launch of our latest product continues our strategy of setting the standard for minimum variance ETFs.”
The fund will be listed on Deutsche Boerse’s Xetra platform and Borsa Italiana initially, with listings on NYSE Euronext and the London Stock Exchange to follow. It will be marketed and distributed by the issuer’s affiliate Natixis Global Asset Management (NGAM).
Hervé Guinamant, president and CEO of NGAM international distribution, said: “We are launching the latest Ossiam ETF in a context of growing interest among investors for emerging markets, which have experienced more than US$14 billion of net new assets so far in 2012.”
The fund will track a new Ossiam index, the Ossiam Emerging Markets Minimum Variance Index, but this will be calculated and published by S&P. The constituents are selected from the 400 most liquid stocks in the S&P IFCI Index, which is a market-capitalisation based index that covers more than 1,800 stocks and ADRs in 20 emerging countries.
The Ossiam index is reweighted to minimise volatility and Ossiam said that on average, the volatility of its index is at least 30% lower than the underlying index.
The new ETF marks a return to the synthetic replication used by Ossiam for the Europe and US ETFs, after its most recent launch, the FTSE fund, was designed using physical replication.
The new ETF will have a higher total expense ratio than the other products in the minimum variance range, however, at 0.75%. This compares with 0.65% for the Europe and US ETFs and 0.45% for the FTSE product.