The fund, called the State Street Multi-Factor Global Equity Fund, invests in low valuation, low volatility and high quality and is aimed to help investors achieve greater diversification and increased risk-adjusted returns over the long term.
The State Street Multi-Factor Global Equity Fund is the fifth advanced beta Ucits fund on SSGA’s Luxembourg platform alongside its Global Managed Volatility Equity; Europe Managed Volatility Equity Fund; US Issuer Scored Corporate Bond Index and Euro Issuer Scored Corporate Bond Index funds.
Advanced beta funds have seen significant growth in Europe over the last few years, with assets under management growing by over 19 per cent in early 2014 alone, and over 280 per cent in the last five years, according to the asset management arm of State Street Corporation.
In addition, the advanced beta market today is driven by equities with more than 82 per cent of total advanced beta assets invested in equity advanced beta.
The new fund directly responds to growing investor interest in advanced beta, particularly in the equity arena, the provider claims.
Its announcement follows the appointment of David Saulnier, as the chief risk officer of SSGA earlier this month.
In October, umbrella organisation SSC announced that in the third quarter of 2014, its foundation made 22 grants totalling over £6.4m to support education, workforce development and sustainable employment programming at non-profit organisations in the US.
Provider’s view
Ana Harris, advanced beta portfolio strategist at SSGA, said: “After the first generation of single factor funds, we are seeing an increasing need from investors for an approach that combines different factors in a transparent way.
“Investors want exposure to a number of factors through one cost-effective solution. The State Street Multi-Factor Global Equity Fund was created to provide exactly this.”
Adviser’s view:
Dean Aitchison, investment manager at KMD Private Wealth Management, said: “The advanced beta approach seems to be becoming a bit more popular. I agree with Ms Harris when she says it combines different factors in a transparent way – especially compared to the traditional approach in which investors would not know what stocks the manager would choose and the method being adopted. This is more of a passive fund.”
Charges
Class I shares: IM fee 35 basis points; total expense ratio of 45 bps. Minimum initial investment: US$3m (£1.9m) or equivalent in the relevant class currency. Minimum subsequent investment: US$1,000 (£640) or equivalent in the relevant class currency. Minimum holdings: equivalent of US$5,000 (£3,200).
Class A shares: IM fee 45 bps; TER 55 bps. Min initial investment: $250,000 (£160,000) or equivalent in the relevant Class Currency. Min subsequent investment: $50 (£32) or equivalent in the relevant Class Currency. Min Holdings: Equivalent of $50 (£32).
Class P shares: IM fee 90 bps; TER 100 bps. Min initial investment: $50 (£32) or equivalent in the relevant Class Currency. Min subsequent investment: $50 (£32) or equivalent in the relevant Class Currency. Min Holdings: Equivalent of $50 (£32)
Verdict
The new fund will be received as good news by many investors. A traditional single-factor smart beta offering is less transparent as the multi-factor approach and could result in periods of underperformance. Combining the three factors into one approach could enhance risk-adjusted performance.
