ETF provider Source has teamed up with Risk Based Investment Solutions (RBIS), a subsidiary of Rothschild & Co, to launch the Source RBIS Equal Risk Equity US Ucits ETF.
It forms the second ETF available in the offering of Rothschild RBIS.
The ETF aims to provide US equity exposure with lower volatility than traditional market-capitalisation-weighted investments without compromising on long-term returns.
It tracks the R Risk-Based US Equity Index, providing exposure to US equities. The largest 500 US stocks are eligible for inclusion but only the 250 stocks with the lowest risk – based on volatility and correlation – are selected.
The index is rebalanced monthly and reviewed quarterly.
The R-Risk Based US Equity Index has delivered 3% lower volatility than the S&P 500 since January 2015 while outperforming that benchmark.
Catherine Adibi at RBIS said: “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. It provides a compelling investment strategy with a proven index track record.”
Chris Mellor at Source said: “The launch of this latest product reflects Source’s commitment to providing best-in-class smart beta strategies and the products that investors are increasingly looking for in today’s volatile, risk-conscious markets.
“We believe that this form of risk control offers a significant step forward beyond volatility targeting and minimum variance strategies. Source is also committed to working with best-in-breed partners and is delighted to be working once again with Rothschild.”