iShares, the world's largest ETF provider, is looking to expand
its footprint in the market with plans for another factor-based
equities ETF that hones in on stock-price momentum as a mechanism
for security selection.
In paperwork it filed with regulators recently, the company
detailed the iShares MSCI USA Momentum Index Fund, which would
track an MSCI benchmark that picks securities from the
market-capitalization-weighted MSCI USA Index, with a focus on
those that show higher momentum.
That momentum metric is measured by a stock's price movement
over the previous six to 12 months based on daily returns, the
filing said. Stocks are then assigned a momentum score, which is
then multiplied by a company's free-float market capitalization to
determine the weighting each security is assigned in the
The ETF will comprise roughly 100 to 150 stocks, with consumer
discretionary, financials and information technology being the main
sectors represented in the mix.
The planned fund is part of a relatively new trend in the ETF
market centering on "smart beta" or so-called strategy indexes that
attempt to carve up the investment universe on the basis of
specific factors; in this case, momentum.
iShares' latest filing comes just days after the company
submitted similar paperwork detailing plans for a risk-based ETF
and a value-based ETF that also riff off of the MSCI USA Index.
The firm already offers straight-up exposure to the broad
market-capitalization-weighted benchmark in its iShares MSCI USA
Index Fund (NYSEArca:EUSA), which has gathered some $157.5 million
since it came to market in mid-2010.
EUSA has a 0.15 percent expense ratio, but the filing didn't
disclose planned fees or a ticker for the new ETF.
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