Market Vectors launches factor-based family of ETFs
Market Vectors ETF Trust has launched four exchange-traded funds powered by factor-based indices from MSCI.
They are: Market Vectors MSCI International Quality ETF (QXUS), Market Vectors MSCI Emerging Markets Quality ETF (QEM), Market Vectors MSCI International Quality Dividend ETF (QDXU), and Market Vectors MSCI Emerging Markets Quality Dividend ETF (QDEM).
“Quality matters. Quality as an investment factor has historically outperformed broad international and emerging markets equities with relatively lower volatility over long time periods1, but until now, a quality-focused, factor-based approach has usually been accessible only through active strategies,” says Amrita Bagaria, international equity ETF product manager with Market Vectors. “We’re very excited to introduce these quality factor ETFs to the broad investment marketplace, and we are particularly pleased to be partnering with MSCI, a global leader in international indexing. We have heard the concerns of investors who understand that you need to be selective and find a way to identify quality stocks, because you don’t necessarily want to hold every single company when investing in international or emerging markets.”
QXUS seeks to replicate, before fees and expenses, the price and yield performance of the MSCI ACWI ex USA Quality Index. QEM seeks to replicate, before fees and expenses, the price and yield performance of the MSCI Emerging Markets Quality Index.
“Holdings in both indexes are screened for historically high return on equity (ROE), stable annual earnings growth and low financial leverage,” says Diana Tidd, managing director and head of the MSCI Index business in the Americas. “Our research suggests that the Quality growth companies have high ROE, low financial leverage and stable earnings that are uncorrelated with the broad business cycle and may provide diversification benefits in portfolio allocation.”
QDXU and QDEM add dividends to the focus of their underlying indices, with QDXU seeking to track, before fees and expenses, the price and yield performance of the MSCI ACWI ex USA High Dividend Yield Index, and QDEM seeking to track, before fees and expenses, the price and yield performance of the MSCI Emerging Markets High Dividend Yield Index.
“Constituents in MSCI’s High Dividend Yield (HDY) indexes are quality growth companies offering a higher dividend yield relative to their respective parent index and with a track record of providing sustainable and consistent dividend payouts,” says Tidd.
QXUS has a gross expense ratio of 0.69 per cent and a net expense ratio of 0.45 per cent. QEM has a gross expense ratio of 0.74 per cent and a net expense ratio of 0.50 per cent. QDXU has a gross expense ratio of 0.67 per cent and a net expense ratio of 0.45 per cent. QDEM has a gross expense ratio of 0.73 per cent and a net expense ratio of 0.50 per cent. The net expense ratios for all four funds are capped contractually until at least 1 February 2015.
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