Australian exchange traded product provider BetaShares has chosen the FTSE RAFI Australia 200 Index as the basis of its first Australian equity fundamental index ETF, which launches on the Australian Securities Exchange (ASX) today.
The BetaShares FTSE RAFI Australia 200 ETF, which will trade under the ASX Code 'QOZ', is an alternatively weighted index which offers Australian investors access to the top 200 companies listed on the ASX as measured by fundamental factors rather than market capitalisation.
"This is the first Australian ETF to use a fundamental index methodology. It provides investors with exposure to a transparent, low cost and simple-to-implement strategy that can be used as a core portfolio allocation, and is based on an index methodology with a compelling track record when compared with traditional, cap weighted benchmarks," BetaShares managing director Alex Vynokur said.
The FTSE RAFI Australia 200 Index is part of the FTSE RAFI Index Series developed with Research Affiliates LLC, which selects and weights constituents according to four fundamental factors - sales, cash flow, book value, and dividends.
By breaking the link with price, the Fundamental Index approach avoids the bias inherent in market capitalisation weighted indices.