Industry Updates

Scalable Capital adds four iShares factor ETFs to investment universe

Tom Eckett

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Scalable Capital has added four iShares factor ETFs to its investment universe, offering exposure to momentum and value in US and European equities.

The iShares Edge MSCI Europe Momentum Factor, iShares Edge MSCI Europe Value Factor, iShares Edge MSCI USA Momentum Factor, iShares Edge MSCI USA Value Factor ETFs all have total expense ratios (TERs) of 0.25%.

The changes will only apply for German, Austrian and Swiss clients and the firm's investment strategy will not be impacted.

In order to be selected into the firm's investment universe, each product goes through an independent selection process.

For factor ETFs, crucial metrics include diversification benefits, strong evidence for the ability of the factor, and fees. The ETFs are all physically replicated.

Research Affiliates: Alice's Adventures in Factorland

Erik Podzuweit, managing director and co-founder of Scalable Capital, commented: "We included the ETFs in our investment universe because factor indices have a better risk/reward ratio over the long term than traditional market-cap weighted indices.

"The value and momentum factors, in particular, perform better in many studies than the broad market."

These ETFs are not the first factor products in Scalable Capital's universe. Since last October, the firm has been investing in small-cap ETFs in US and European equities.

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