November 03, 2017
Nationwide enters the ETF market
Strategic Beta offerings seek to deliver improved returns through risk reduction and enhanced diversification
Columbus, OH - Nationwide has entered the exchange-traded fund (ETF) market with the launch of three strategic beta ETFs that seek to provide investors with improved risk-adjusted returns by enhancing diversification and reducing volatility. The new ETFs include the Nationwide Maximum Diversification U.S. Core Equity ETF, the Nationwide Risk-Based U.S. Equity ETF, and the Nationwide Risk-Based International Equity ETF. Nationwide’s launch of these new funds also marks the first time that proprietary indexes developed by TOBAM and Rothschild Risk Based Investments LLC (“Rothschild”) will be available to U.S. retail investors in an ETF structure.
“As we continue to adapt and respond to major investment management trends in the midst of mounting uncertainty stemming from an aging bull market, Nationwide’s strategic beta ETFs may provide investors with options to manage risk, enhance diversification and reduce volatility in their portfolios,” Chris Graham, chief investment officer for Nationwide Funds, said.
The Nationwide Maximum Diversification U.S. Core Equity ETF (MXDU) seeks to deliver higher risk-adjusted returns relative to market cap-weighted strategies by creating a more diversified risk allocation aimed at capturing the full equity risk premium. The fund tracks an index developed by TOBAM that applies liquidity and socially responsible investment (SRI) screens in determining the investable universe. Based on a patented, proprietary mathematical formula, the TOBAM Diversification Ratio®, TOBAM weights individual stocks to drastically minimize the correlations among holdings, resulting in the creation of the “most diversified portfolio,” given a 50% active share constraint.
“By avoiding the unintended risks typically associated with market cap-weighted investments, Nationwide’s strategic beta ETFs are designed for those investors seeking broad equity market exposure with the added benefits of competitive long-term performance and potentially less risk,” Graham said.
The Nationwide Risk-Based U.S. Equity ETF (RBUS) and the Nationwide Risk-Based International Equity ETF (RBIN) track indexes developed by Rothschild Risk Based Investments LLC and seek to reduce portfolio volatility, mitigate severe drawdowns and enhance the Sharpe ratio, all without curtailing returns.
Rothschild’s investment process begins with a line-by-line assessment of each stock in the investable universe to determine the level of risk corresponding to each security. The positions representing the riskiest 50% of the stocks in the universe are eliminated to remove unnecessary risk from the portfolio. Finally, the remaining stocks are weighted according to their volatilities and correlations, such that each constituent contributes the same amount of risk to the overall portfolio.
Financial professionals interested in learning more should call the Nationwide ETF sales desk at 1-877-893-1830 or visit http://etf.nationwide.com.
In addition to the new strategic beta ETFs, Nationwide is a strategic partner to advisors, providing a comprehensive suite of subadvised mutual funds designed to help meet the unique investment goals and risk tolerances of investors. Nationwide currently manages 115 funds with approximately $65 billion in assets, excluding fund of funds.
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s. The company provides a full range of insurance and financial services, including auto, commercial, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com.