Smart beta launch

Smart beta launch

Global index provider FTSE Russell and smart beta strategies firm Research Affiliates have launched a series of smart beta indices.

Key features:

• The FTSE RAFI Equity Income Index Series will track high dividend-paying shares which are screened to target sustainable income.

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• The indices are weighted according to fundamental measures, as opposed to market capitalisation

• Source, an ETF issuer, contributed to the development of the indices and will license the series.

Jason Hsu, co-founder of Research Affiliates, said: “For a good number of investors, accessing sustainable, high income remains an unmet need. Yields in fixed income remain historically low, while within the equity space, existing high dividend strategies tend to tilt toward low growth sectors or poor quality stocks.”

IFA verdict:

Duncan Glassey, partner at Edinburgh-based Wealthflow, said: “I understand the concept of this smart beta index, and why it would be looking for dividends and reinvesting them, but for me the most important thing is having a global, diversified portfolio at low cost rather than any sexy new products.”