Russell launches three focused, factor-based international ETFs

By Toni Weeks

San Diego, Nov. 3 - Russell Investments announced it has launched three new international equity factor exchange-traded funds, according to a press release.

The ETFs, which join Russell's series of 10 domestic factor-based ETFs, are designed to provide investors with focused exposure to fundamental risk factors that have shown strong influences on portfolio returns within their portfolio's international equity allocation. The stocks are drawn from 24 developed countries, including Canada.

The Russell Developed ex-U.S. Low Beta ETF (NYSE Arca: XLBT) offers exposure to large cap stocks in non-U.S. developed markets with the lowest predicted beta or sensitivity to price changes of the broad market over the next three to six months.

The Russell Developed ex-U.S. Low Volatility ETF (NYSE Arca: XLVO) offers exposure to large cap stocks in non-U.S. developed markets that have exhibited the lowest variability in total returns over the previous 60 trading days.

The Russell Developed ex-U.S. High Momentum ETF (NYSE Arca: XHMO) offers exposure to large cap stocks in non-U.S. developed markets that have exhibited the highest cumulative total returns over the previous 250 trading days, excluding the last 20 trading days.

The three ETFs have a net expense ratio of 0.25%, compared to 0.2% for Russell's five U.S. large cap Russell 1000 factor ETFs and 0.3% for Russell's five U.S. small cap Russell 2000 factor ETFs from the same series.

The new ETFs will be listed on NYSE Arca beginning Thursday.

"The addition of these international equity factor ETFs is particularly timely, as investors may be starting to look toward year-end portfolio rebalancing," James Polisson, managing director of Russell's global ETF, commented in the release.

Axioma, Inc. provides risk analytics and portfolio optimization for the ETFs. The new ETFs are constructed with an underlying Russell-Axioma Developed ex-U.S. Large Cap Factor index, each of which draws from the comprehensive Russell Developed ex-U.S. Large Cap index. The new international indexes launched last week and are reconstituted monthly to help maintain their focus on each specific factor.

"The Russell-Axioma approach when developing these products was to seek true factor purity in the returns, not just factor exposure," Greg Friedman, managing director of Russell's global ETF product group, said in the release. "Investors may benefit from understanding their vulnerability to certain risk factors, and targeting these factors can provide them with a more focused portfolio and help manage unintended risks."

Based in Seattle, Russell is a financial services firm.

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