FTSE Russell and Research Affiliates Launch New Smart Beta Index Series

  • New index series focuses on high dividend-paying, high quality stocks
  • Builds on 10 years of smart beta leadership and innovation from FTSE Russell and Research Affiliates
  • Source ETFs to track the index series in Europe

FTSE Russell, the global index provider, and Research Affiliates LLC, a pioneer in smart beta strategies, today announce the launch of new smart beta indexes: the FTSE RAFI Equity Income Index Series. The benchmarks will track high dividend-paying stocks which are screened to target sustainable income. The indexes are weighted according to fundamental measures, as opposed to market capitalisation. 

Source, one of Europe’s largest ETF issuers, contributed to the development of the indexes in response to enquiries from investors for a better-structured dividend-focused strategy. Source will be the first ETF provider to license the index series, and a family of ETFs linked to the benchmarks is set to be launched by Source later this year in Europe. 

The FTSE RAFI Equity Income Index Series builds on the success of the leading smart beta partnership between FTSE Russell and Research Affiliates, which dates back to 2005. With one of the longest track records in the smart beta industry, FTSE RAFI indexes have been widely acknowledged and adopted as the underlying foundation for a broad variety of investable products in the form of ETFs, managed accounts and mutual funds.

As of 31 March 2015, investable products linked to indexes developed by FTSE Russell and Research Affiliates have approximately USD $75 billion of AUM.

Caroline O'Shaughnessy, Managing Director, Sales and Marketing, FTSE Russell, commented:
“As our partnership with Research Affiliates reaches its tenth year, we are proud that our close collaboration continues to yield innovative benchmarks that respond to investor needs. Source’s licensing of the FTSE RAFI Equity Income Index Series reflects this, as alternative benchmarks provide a critical, low cost investment solution to a wide range of market participants.”

Jason Hsu, Co-Founder and Vice Chairman, Research Affiliates, said:
“For a good number of investors, accessing sustainable, high income remains an unmet need. Yields in fixed income remain historically low, while within the equity space, existing high dividend strategies tend to tilt toward low growth sectors or poor quality stocks. To address this gap in the market, Research Affiliates and FTSE Russell are introducing these new smart beta indexes, which we built in close collaboration with Source. The FTSE RAFI Equity Income Index Series includes high dividends from companies that have been screened for their ability to sustain their dividends.”

Peter Thompson, President, Source, said:
“We are delighted to work with FTSE Russell and Research Affiliates in the creation and licensing of these FTSE RAFI indexes. We have seen the increasing appetite for smart beta ETFs, and particularly for dividend-focused strategies like these, and look forward to working with Research Affiliates and FTSE Russell to meet the investor need for this kind of exposure.” 

In common with all FTSE Russell indexes, the index series is managed according to a publicly available set of rules and overseen by an independent committee of market practitioners.

 

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For further information:

Global Media 
Harry Stein                                        +44 (0) 20 7797 1222
Mark Benhard                                    +1 212 314 1135 
                                                          newsroom@lseg.com

Regional Contacts
Hong Kong: Fennie Wong                    +852 2164 3267
Sydney: Laura McCrackle                    +61 2 9293 2867

Research Affiliates Europe:
Toby Mitchell, JPES Partners                +44 (0)20 7520 7631 ra@jpespartners.com
US: Tucker Hewes, Hewes Communications, Inc. +1 (212) 207-9450 hewesteam@hewescomm.com

Notes to editors:

About FTSE Russell:
FTSE Russell is a global index leader that provides innovative benchmarking, analytics and data solutions for investors worldwide.  FTSE Russell calculates thousands of indexes that measure and benchmark markets and asset classes in more than 80 countries, covering 98% of the investable market globally and trading on over 25 exchanges worldwide.

FTSE Russell index expertise and products are used extensively by institutional and retail investors globally. Leading asset owners, asset managers, ETF providers and investment banks use FTSE Russell indexes to benchmark their investment performance and create ETFs, structured products and index-based derivatives.

A core set of universal principles guides FTSE Russell index design and management: a transparent rules-based methodology is informed by independent committees of leading market participants. FTSE Russell is focused on applying the highest industry standards in index design and governance. FTSE Russell is also focused on index innovation and customer partnerships as it seeks to enhance the breadth, depth and reach of its offering.

FTSE Russell is wholly owned by London Stock Exchange Group.

For more information, visit www.ftserussell.com

About Research Affiliates:
Research Affiliates, LLC, is a global leader in smart beta and asset allocation. Dedicated to creating value for investors, we seek to have a profound impact on the global investment community through our insights and products. Our firm is built on a strong research base and we deliver solutions in partnership with some of the world’s leading financial institutions. As of December 31, 2014, over $170 billion of assets are managed worldwide using investment strategies developed by us. Research Affiliates is headquartered in Newport Beach, California.
Web:    www.researchaffiliates.com
Twitter: @ra_insights