Columbia Threadneedle added to its lineup of alternatively weighted exchange traded funds Wednesday with the debuts of two funds designed as replacements for popular cap-weighted strategies.
What Happened
The issuer's newest ETFs are the Columbia Research Enhanced Core ETF RECS and the Columbia Research Enhanced Value ETF REVS.
RECS follows the Beta Advantage Research Enhanced U.S. Equity Index and can be used as an alternative to traditional Russell 1000 strategies.
RECS' “methodology leverages the results of Columbia Threadneedle Investments proprietary equity quantitative investment models to rate each company within the Russell 1000 Index based on quality, value and catalyst factors, and selects securities that are favorably rated. It is market cap-weighted and sector-neutral to the Russell 1000 Index,” according to the issuer.
RECS roster will typically consist of 325 to 400 stocks of large-cap U.S. growth and value companies. Top holdings in the new ETF include Microsoft Corp. MSFT and Apple Inc. AAPL.
Why It's Important
REVS, the new value fund, debuts at a time when value stocks appear to be on the mend. That new ETF tracks the Beta Advantage Research Enhanced U.S. Value Index.
REVS will usually hold 250 to 290 stocks of large-cap U.S. value companies. Six of the new ETF's top 10 holdings are members of the Dow Jones Industrial Average, including JPMorgan Chase JPM and Chevron CVX.
What's Next
“The ETFs aim to optimize equity exposure by eliminating stocks from the benchmark that are rated unfavorably by the Columbia Threadneedle quantitative research team,” according to Columbia Threadneedle.
The new funds are built with advisors in mind that are looking to remove lagging stocks from passive funds. A Columbia Threadneedle advisor survey indicates nearly two-thirds of respondents are frustrated about not being able to remove lagging stocks from passive index funds and ETFs.
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