XACT - New fundamental index fund listed in Stockholm
Tomorrow, XACT's ninth ETF (Exchange Traded Fund) will be listed on the Stockholm stock exchange: XACT F Sweden - an index fund based on the companies' fundamental key ratios.
"This fund will be very attractive to private and institutional investors alike, due to its opportunities for strong returns, broad risk diversification and low fee of 0.5%," says Dag Tjernsmo, chief executive of XACT Fonder.
In the US, fundamental-weighted indices have attracted great interest, as they have been found to give better returns than capital-weighted indices. In Sweden, the return on the fundamental-weighted index has been 10.5 percentage points higher than that of the broad capital-weighted OMXSB Index (over the period 31 Dec 1999 to 31 Dec 2006).
"For those benchmarked against traditional indices, XACT F Sweden will be a highly attractive investment opportunity. In addition, given the public debate on high fund management fees, we are pleased to be able to offer this fund at the same favourable terms to both private and institutional investors," says Dag Tjernsmo.
In the calculation of the index, stocks' key ratios form the basis of index weightings, rather than market capitalisation, which is used for most other indices. In simple terms, it can be said that an undesired effect of capital-weighted indices is that they overweight in overpriced stocks and underweight in underpriced stocks. To avoid this effect, it is necessary to weight stocks according to criteria other than market capitalisation. The fundamental method solves this by using fundamental factors (e.g. sales, cash flow, dividends and shareholders' equity) as the basis for index weightings.
This is a concept that has been tested against capital-weighted indices in the 23 countries which make up the FTSE Developed World Index, and it has created added value in all these countries. This concept is very important in theoretical and practical terms - it is the most significant investment concept I have ever seen," says Rob Arnott, chairman of Research Affiliates and the originator of fundamental indexing.
Henrik Norén, XACT Fonder AB, Tel. +46 8 701 1222
XACT Fonder was founded in 2000 and is now the Nordic market leader in exchange-traded funds. In 2000, XACT launched the first exchange-traded fund in the Nordic region. As of 20 February 2007, there are six XACT funds listed on the Stockholm stock exchange, one on the Oslo stock exchange and one on the Helsinki stock exchange. XACT funds are offered by XACT Fonder in Sweden, Handelsbanken Fondförvaltning in Norway and Handelsbanken Fondbolag in Finland. Total assets under management in XACT Fonder amount to over SEK 20bn. The fund management company is a subsidiary of Handelsbanken, one of Sweden's leading players in the field of asset management.
XACT Fonder AB, Blasieholmstorg 12, 106 70 Stockholm, Sweden, Tel. 08-701 4000, Fax 08-701 3833, xact@handelsbanken.se, www.xact.se.
A fund's historical return is no guarantee of future return. Investments made in a fund can rise or fall in value and it is not certain that you will get back all of the capital you have invested.
"FTSE®" is a trade mark jointly owned by the London Stock Exchange Plc and the Financial Times Limited and is used by the FTSE International Limited under Licence. "Research Affiliates", "RAFI" and "Fundamental Index" are trade marks of Research Affiliates LLC ("RA").
The FTSE Research Affiliates are calculated by FTSE International Limited ("FTSE®") in conjunction with Research Affiliates LLC ("RA"). Neither FTSE nor RA sponsors, endorses or promotes this product and are not in any way connected to it and do not accept any responsibility in relation to this issue, operation and trading.
All copyright in the index values and constituent lists vests in FTSE. All rights in and to the RA fundamental indexing methodology used in calculation of the FTSE Research Affiliates Fundamental Indexes vest in RA. XACT Fonder AB has obtained full licence from FTSE to use such copyright in the creation of this product.
Patent pending. Publ. Nos. US-2005-0171884-A1, US-2006-0015433-A1 and WO 2005/076812.