BetaShares has announced the launch of a new ETF that will track the top 1,000 US stocks based on measures of fundamental value.
The BetaShares FTSE RAFI US 1000 ETF weights companies by their economic size rather than market capitalisation, utilising a method called 'fundamental indexing'.
The launch comes after the company unveiled an Australian equities Fundamental Index ETF in mid-2013.
BetaShares managing director Alex Vynokur said the launch of the fund – which will use fundamental index methodology – will provide investors with a simple way to obtain diversified US equities exposure.
“On average, Australian investors have a heavy bias towards domestic equities,” Mr Vynokur said.
“Investors looking for simple, transparent access to the US equities market through an ETF will now have the option of selecting a product that provides broad-based exposure at low cost.
“[Also] while additionally using an intelligent methodology that seeks to avoid the potential of market cap indices to overweight stocks that are overvalued, and underweight stocks that are undervalued,” he said.
BetaShares also added that the premise of the fundamental index strategy is to weight stocks using measures that do not depend on the fluctuations of market prices, as opposed to market capitalisation weighted indices.
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