MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Friday, April 4, 2025 Westwood Builds 1 Autocracy-Avoiding Fund, And ... The folks at a 42-year-old, publicly traded asset manager in Texas are teaming up with a 20-year-old firm across the pond in France to help investors dramatically reduce their exposure, both direct and indirect, to autocracies.
Casey, Choueifaty, and other Westwood and TOBAM team members gathered that day at the NYSE to celebrate the debut of BFRE. They also brought reporters to the exchange for a media luncheon. BFRE, EFRE, and IFRE will all come with the same expense ratio: 50 basis points. BFRE now has about $588,000 in AUM. The launch of BFRE boost's Westwood's ETF lineup to 5 funds in total. Drew Miyawaki, senior vice president and director of Westwood's managed investment solutions team, confirms that BFRE is the first fund offered by the MIS team. (Westwood brought in the MIS team, based near Chicago, in the fall of 2023.) IFRE, EFRE, and BFRE are all powered by TOBAM's LBRTY concept. Choueifaty explains that, per a "huge quanity of academic research," "Autocracy simply does not work from an economic point of view." So, the TOBAM worked to identify a new risk factor, the autocracy risk factor, which they find the market to negatively reward over the short, medium, and long-term. In their research, they also found that simply divesting from autocractic countries and their companies is not enough, as 85 percent of Western investors' exposure to autocracies is through companies listed on Western stock exchanges. "The immense majority of exposure to autocracy is indirect," Choueifaty tells reporters. "This risk factor is independent from other risk factors," though he adds that factoring it in does introduce a small "quality bias," as companies with less autocracy exposure tend to be higher quality, on average. Choueifaty says that exposure to autocracies contributes 400bps of volatility to the MSCI ACWI, a global large- and mid-cap equity index. Using TOBAM's LBRTY approach to reduce exposure to the autocracy risk factor lowers its volatility contribution to 60bps, Choueifaty adds, and most of that reduction has to do with accounting for indirect exposure. Choueifaty claims that TOBAM is the first asset manager to design an offering to avoid both direct and indirect exposure to autocracies, and that BFRE is thus the first fund to do so. "To me this is a global, sleep-at-night ETF," Greg Behar, SVP and head of MIS at Westwood, tells reporters, adding that BFRE is designed to be a core portfolio holding for investors. "We think it's totally blue ocean. There's not another ETF like it." "There are other ETFs that look at emerging markets and remove China. It's easy to see that direct piece," Behar adds. describing direct exposure as the part of the iceberg that you can see, while indirec exposure is the part of the much larger part of the iceberg that's hidden beneath the waves. Chris Doran, managing director and head of ETF distribution and national accounts at Westwood, describes the new ETF as suitable for both institutional investors and intermediaries. He tells MFWire that the Westwood team will, as is traditional with new ETFs, initially focus their distribution efforts on RIAs. "It's an all-weather product, an all-advisor product," Doran says. BFRE, EFRE, and IFRE will all have the same five-person PM team. That team includes: BFRE is designed to track the TOBAM LBRTY All World Equity Index. EFRE is designed to track the TOBAM LBRTY Emerging Market Equity Index. And IFRE is designed to track the TOBAM LBRTY All World Ex US Equity Index. IFRE, EFRE, and BFRE will all be passively managed, diversified series of the Ultimus Managers Trust. The ETFs' other service providers will include: Printed from: MFWire.com/story.asp?s=69742 Copyright 2025, InvestmentWires, Inc. All Rights Reserved |
