Market Vectors ETF Trust has launched four new Exchange Traded Funds (ETFs) powered by factor-based indices from MSCI.
They are: Market Vectors MSCI International Quality ETF, Market Vectors MSCI Emerging Markets Quality ETF, Market Vectors MSCI International Quality Dividend ETF, and Market Vectors MSCI Emerging Markets Quality Dividend ETF.
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Amrita Bagaria, international equity ETF product manager with Market Vectors, said: "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. 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 (ticker: M1WDUQU); QEM seeks to replicate, before fees and expenses, the price and yield performance of the MSCI Emerging Markets Quality Index (ticker: M1EFQU).
Diana Tidd, managing director and head of the MSCI Index Business in the Americas, Market Vectors, said: "Holdings in both indexes are screened for historically high return on equity [ROE], stable annual earnings growth and low financial leverage. 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 (ticker: M1WDUDY), and QDEM seeking to track, before fees and expenses, the price and yield performance of the MSCI Emerging Markets High Dividend Yield Index (ticker: M1EFDY).
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By GlobalDataTidd added: "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."
Bagaria added: "We believe the MSCI approach is particularly compelling in these instances. By combining the search for dividend yield in international and emerging markets with MSCI’s Quality screens, investors will be able to add exposures that may potentially generate excess returns and benefit their portfolios in down markets."
Market Vectors notes that investing in international and emerging markets comes with associated risks, including risks associated with investing in foreign securities, risks associated with investing in medium-capitalization companies, and more.
Though these funds are Market Vectors’s first international factor-based ETFs, they join an already robust group of international and emerging market offerings, including the Indonesia Index ETF (IDX), Russia ETF (RSX), Vietnam ETF (VNM), and more.
QXUS has a gross expense ratio of 0.69% and a net expense ratio of 0.45%. QEM has a gross expense ratio of 0.74% and a net expense ratio of 0.50%. QDXU has a gross expense ratio of 0.67% and a net expense ratio of 0.45%. QDEM has a gross expense ratio of 0.73% and a net expense ratio of 0.50%. The net expense ratios for all four funds are capped contractually until at least February 1, 2015.
