ETF provider Source, Research Affiliates and Legal and General Investment Management (LGIM) have joined forces in order to launch three smart beta ETFS.
The FTSE RAFI Equity Income ETFs, which launched today on Xetra and London Stock Exchange, aim to offer investors both high yield and access to quality companies.
The FTSE RAFI Equity Income indices have been developed by US-based Research Affiliates, while LGIM acts as a manufacturer, in charge of managing the assets. Source is responsible for marketing and distribution of the funds.
Research Affiliates screens companies based on financial health and weighs the remaining stocks based on dividend yield. It also considers fundamental measures of the companys size, rather than simple market capitalisation measures.
Rob Arnott, chairman and CEO of Research Affiliates explains: “Althought there are a number of dividend-based indexing strategies on the market, few seek to assure that the stock is attractively priced on measures other than dividend yield and even fewer filter to assure that the dividend is sustainable.”
The ETFs are available with US dollar, British pound and euro as base currencies, the former two being traded on London Stock Exchange, the latter on Deutsche Boerse (Xetra). All three are physically replicating, have an ongoing charge of 0.35% per annum and pay out dividends on a quarterly basis.