Boston-based FFCM has created a new lineup of seven “market neutral” exchange traded funds called QuantShares. The ETFs are designed to offer investors strategies that are not correlated to the overall market.
The new market-neutral ETFs will be based upon factors such as momentum, quality, size, value and beta, according to a press release. FFCM also points out that QuantShares hold short equity positions. [John Hancock Enters the ETF Fray]
“QuantShares are the first ETFS that isolate factor returns,” said Bill DeRoche, FFCM’s CEO. “They offer a low-cost, transparent way to hedge risk and seek to produce spread returns that are independent of the market’s direction.”
The ETFs may attract institutional investors, hedge funds, pension funds and wealth managers. Each fund will hold 200 short and 200 long positions in stocks from the Dow Jones U.S. Market Index. [Goldman Sachs Readies New ETF]
“We believe that factor-based investing has the potential to produce stronger risk-adjusted returns than the overall market,” DeRoche said. “Factors drive from 60% to 80% of a stock’s return, according to our research.”
Tisha Guerrero contributed to this article.