BetaShares today announced the launch of the first US equities ETF traded on the ASX to use the Fundamental Index® methodology.
The BetaShares FTSE RAFI U.S. 1000 ETF will trade under the ASX code “QUS” and aims to provide an investment return that tracks the performance of the FTSE RAFI US 1000 Index (the “Index”) before fees and expenses. The equities included in the Index are weighted based on measures of the economic size of each company rather than market capitalisation, and include the largest 1000 securities by ‘fundamental value’ amongst US-listed stocks.
The launch of this Fund follows the success of BetaShares’ Australian equities Fundamental Index ETF, the BetaShares FTSE RAFI Australia 200 ETF (ASX: QOZ), launched in mid-2013.
The premise of the fundamental indexation strategy used by QUS is to weight stocks using measures that do not depend on the fluctuations of market prices, as opposed to market capitalisation weighted indices which link the price of a security with its importance to the index.
The methodology used by this index means that, upon a rebalance, the index will:
Reduce weightings to equities where the market price has increased beyond its economic size
Increase weightings to equities where the market price has fallen below its economic size
The Index comes with a compelling track record when compared with the traditional cap-weighted benchmark, outperforming the S&P 500 index by an average of over 2% p.a. since 1990