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A smart beta exchange traded fund, the Hartford Multifactor Developed Markets exUS ETF (RODM) debuted on 02/25/2015, and offers broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.70 billion, this makes it one of the larger ETFs in the Broad Developed World ETFs. RODM is managed by Hartfordfunds. This particular fund seeks to match the performance of the Hartford Risk-Optimized Multifactor Developed Markets (ex-US) Index before fees and expenses.
The Hartford Risk-Optimized Multifactor Developed Markets (ex-US) Index seeks to de-concentrate country, currency, and individual company risks in developed market economies (ex US).
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for RODM are 0.29%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.57%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Zim Integrated Shipping Serv Common Stock (ZIM) accounts for about 0.90% of the fund's total assets, followed by Loblaw Companies Ltd Common Stock (L) and Koninklijke Ahold Delhaize N Common Stock Eur.01 (AD).