Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

US firm to enter the UK ETF battlefield

US firm to enter the UK ETF battlefield

First Trust Advisors, a US investment firm, is set to launch a range of alternative exchange-traded funds (ETFs) in the UK and Europe.

The firm, which launched its first ETF in 2005 and has garnered around $9.3 billion in assets under management, is seeking to list a range of international equity ETFs on the London Stock Exchange and various venues across Europe.

The AlphaDex range of ETFs is based on indices that select stocks from major benchmarks, based on value and growth factors, in order to add alpha.

Dan Lindquist, managing director of First Trust, said AlphaDex provides an opportunity for UK and European investors to gain access to products other than the mainstream market-cap weighted ETFs.

‘We are committed to providing investors with opportunities to capitalise on companies with stronger investment merit through ETFs using our AlphaDEX methodology,’ he said in a statement.

Unlike other ‘Smart Beta’ type products, these ETFs are based on proprietary indices that select growth and value stocks, which are then ranked according to how highly they score against the criteria.

Depending on their scores, the stocks are grouped, with those in the bottom group underweight the benchmark. The stocks are then weighted equally within each group, in order to eliminate stock-specific risk.

The benchmarks are rebalanced on a quarterly basis, to take profits and realign stock positions.

Lindquist told Wealth Manager: ‘This is the next wave of growth, through innovation, particularly in terms of how the index is constructed and the ability to add value.’

As these ETFs are based on proprietary indices that select stocks designed to add alpha, the products are likely to have slightly higher charges at around 70 basis points, compared with typical market cap-weighted ETFs.

First Trust aims to list the initial three funds on the Irish and London stock exchanges, subject to regulatory approval.


Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Brewin's Gutteridge: Yuan direction

Brewin's Gutteridge: Yuan direction

This week Brewin Dolphin's research head chats to Fidelity Asian Investment Directors Jenny Lee and Gary Monaghan about the big changes in China.

Play On the Road Challenge: horsing around on the polo pitch

On the Road Challenge: horsing around on the polo pitch

Libby Ashby takes to the polo pitch with Stuart Leigh-Davies from Redmayne-Bentley for an 'On the Road' challenge.

Brewin's Gutteridge: where Miton's Godber sees value

Brewin's Gutteridge: where Miton's Godber sees value

This week Brewin Dolphin's research head talks to George Godber, co-lead fund manager of the Miton UK Value Opportunities fund, about value investing.

Your Business: Cover Star Club

Profile: what tempted Brewin's Glasgow team over to Rathbones?

Profile: what tempted Brewin's Glasgow team over to Rathbones?

Rathbones’ Glasgow office has only been open for three months but the team, led by Angus Kerr, has already attracted new clients

Wealth Manager on Twitter