This article was originally published on ETFTrends.com.
Nationwide launched a new strategic beta ETF on Tuesday that seeks to deliver higher risk-adjusted returns relative to market cap-weighted strategies by creating a more diversified risk allocation aimed at capturing the full equity risk premium.
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"The Nationwide Maximum Diversification Emerging Markets Core Equity ETF seeks to identify the exact combination of stocks within the emerging markets universe that will maximize the diversification benefits of a portfolio while retaining the full equity risk premium,” Chris Graham, chief investment officer for Nationwide Funds, said.
Like the Nationwide Maximum Diversification U.S. Core Equity ETF (MXDU) launched last year, the Nationwide Maximum Diversification Emerging Markets Core Equity ETF (MXDE) seeks to deliver higher risk-adjusted returns relative to market cap-weighted strategies by creating a more diversified risk allocation aimed at capturing the full equity risk premium.
Both funds track an index developed by TOBAM that applies liquidity and socially responsible investment (SRI) screens in determining the investable universe. Based on a patented, proprietary mathematical formula, the TOBAM Diversification Ratio, TOBAM weights individual stocks to minimize the correlations among holdings, resulting in the creation of the “most diversified portfolio,” given a 50% active share constraint.
“Since the end of 2015 the MSCI Emerging Market index has outperformed the S&P 500 Index by nineteen percent on a total return basis,” Graham said. “We think emerging markets are a great option to help advisors combat their clients’ home bias investing and further diversify their portfolio.”
In addition to the new strategic beta ETFs, Nationwide is a strategic partner to advisors, providing a comprehensive suite of subadvised mutual funds designed to help meet the unique investment goals and risk tolerances of investors.
For more information on new fund products, visit our new ETFs category.
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