Desjardins emerging-markets ETF uses multi-factor strategy

Morningstar Canada 1 December, 2017 | 6:00PM

Today's launch of Desjardins Emerging Markets Multifactor-Controlled Volatility (symbol: DFE) on the Toronto Stock Exchange brings to four the number of Desjardins exchange-traded funds that employ similar strategic-beta methodologies in different geographic mandates.

The newest ETF, which has a management fee of 0.65% that covers most operating expenses, joins ones launched earlier this year that invest in Canadian, U.S. and developed overseas markets.

All four ETFs are based on the Scientific Beta series of multifactor controlled-volatility indexes. These indexes are licensed by ETF sponsor Desjardins Global Asset Management Inc. from the EDHEC-Risk Institute, which maintains three offices in Europe and one in Singapore.

The six factors used in stock selection for the Scientific Beta country and regional indexes are size, valuation, momentum, volatility, profitability and asset growth. The methodology is designed to reduce volatility and improve diversification when compared to passive equity indexes whose stock weightings are based on market capitalization.

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