A new ETF on the London Stock Exchange

Ossiam, has listed a new fund on the London Stock Exchange, the Ossiam ETF FTSE 100 Minimum Variance.

The new ETF uses physical replication to track the performance of the FTSE 100 Minimum Variance TR Index. The index – also new – is calculated and published by FTSE and seeks to deliver the net total return performance of a selection of stocks from the FTSE 100 with the intention of mitigating risk. The index methodology was developed jointly by FTSE and Ossiam.

The new ETF is a significant addition to the product range of Ossiam and Natixis Global Asset Management as it will give investors exposure to a selection of the most liquid UK stocks, weighted with the intention to minimise the volatility of the total portfolio. On average the volatility of the FTSE 100 Minimum Variance TR index is at least 24%[1] lower than the FTSE 100 with a significant reduction in drawdowns.

The fund has a total expense ratio of 0.45%, is a physically replicating fund and does not undertake securities lending.

Bruno Poulin, CEO of Ossiam, commented, “The launch of the Ossiam ETF FTSE 100 Minimum Variance is a demonstration of our ability to continuously develop creative products and respond to investors’ needs for attractive products in diverse equity market configurations. This was also an excellent opportunity to start working with FTSE Group, a global leader for index products, in the development of the index methodology underlying the fund. In addition this new ETF which uses full replication with no securities lending confirms our commitment to provide solutions adapted to UK clients. In our opinion extra revenues generated by securities lending would not justify the additional layer of risk supported by the fund holders.”

Tony Raw, Managing Director, FTSE Group, said, “We are delighted to work with Ossiam in the creation of the FTSE 100 Minimum Variance ETF. This launch demonstrates how FTSE’s exacting standards of index design and established track record of developing alternatively weighted indices, mean we are increasingly seen as the natural partner for ETF issuers seeking to develop alternatively weighted index products.”

In the UK, the new ETF is distributed and marketed through Natixis Global Asset Management UK Ltd.

Terry Mellish, Head of UK and Ireland and global consultant relationships for Natixis Global Asset Management UK Ltd., said, “Minimum variance based investment strategies are well-recognized vehicles aiming at mitigating risk in volatile markets. With the unique Ossiam ETF FTSE 100 Minimum Variance – the first of its kind in the U.K.- we further complement Natixis Global Asset Management’s wide range of innovative investment solutions. Ossiam ETFs offer smart, easy and transparent ways to diversify equity exposure.”

[1] This model assumes reinvestment of net dividends. Past volatility data is not a reliable indicator of future volatility. Investors should note that the reduction of the volatility can decrease the potential performance of the fund indexed to the strategy. Due to its exposure to equity markets, the Fund may experience significant volatility. Hence, investors should note that the value of their investment could fall as well as rise and they should accept that there is no guarantee that the underlying methodology of the Index will indeed result in a return above any comparable investment strategy or that they will recover their initial investment.