Ossiam’s smart beta minimum variance ETFs deliver strong performance in debut year

Jul 16th, 2012 | By | Category: Equities

Ossiam, a specialist smart beta investment manager and an affiliate of Paris-based Natixis Global Asset Management (NGAM), has announced that four of its ETFs listed on the London Stock Exchange (LSE) have reached their first anniversary.

Ossiam's minimum variance ETFs deliver strong performance in debut year

One year on and Ossiam’s smart beta minimum variance ETFs have lived up to their name.

The ETFs passing their one year milestone are the Ossiam ETF Euro Stoxx 50 Equal Weight NR (L5EW), the Ossiam ETF STOXX Europe 600 Equal Weight NR (L6EW), the Ossiam ETF iSTOXX Europe Minimum Variance NR (LEMV) and the Ossiam ETF US Minimum Variance NR (USD) (USMV).

The four funds are based on two smart beta strategies: equal weight, which seeks to improve diversification; and minimum variance, which seeks to reduce risk.

Overall, the funds, which were also cross-listed on the Frankfurt, Milan, Paris and Zurich exchanges in 2011, have performed well respective to their peers. While the equal-weight ETFs have disappointed somewhat, the minimum variance ETFs have posted exceptionally strong performance numbers, outperforming their respective benchmark universes.

Of particular note is the Ossiam ETF iSTOXX Europe Minimum Variance NR, which has delivered a positive return of 6.79% compared to the negative return of the STOXX Europe 600 investment universe, which is down 3.74%. Moreover, this performance advantage has been achieved with significantly lower volatility: 13.34% for the Ossiam fund, versus 22.93% for the index.

The Ossiam ETF US Minimum Variance NR (USD) has also delivered a stand-out performance. It beat its underlying benchmark universe (14.09% versus 5.81%) and with lower volatility (15.74% versus 23.34%).

Bruno Poulin, CEO of Ossiam, said: “In just a few months our award-winning minimum variance systematic approach has attracted a lot of interest backed up by strong performance. What investors are looking for is a simple way to build better, diversified portfolios which reduce volatility and drawdowns. We think the steady growth of assets in our funds in a challenging year is a good indicator that we have a sound basis for continuing success.”

Hervé Guinamant, President and Chief Executive Officer of NGAM International Distribution, said: “First anniversaries are particularly worth celebrating. We saw Ossiam’s great potential from the beginning and, since the launch of these funds, have received very positive feedback from our clients and peers in the market. Ossiam’s strategies and funds are a key component in building more durable portfolios that can stand up to today’s volatile markets while helping investors reach their objectives.”

The Ossiam minimum variance ETFs were the first ETFs in Europe to offer access to a diversified portfolio where securities are selected and weighted with the intention of mitigating risk by lowering volatility. Meanwhile, the Ossiam equal weight ETFs are based on broad European indices attributing the same weight to each of their constituents to avoid concentration effects and bias towards large companies.

Since June 2011, Ossiam has listed three more ETFs, bringing its ETF product range in the UK to a total of seven funds. The additional funds are the Ossiam ETF FTSE 100 Minimum Variance (UKMV), the Ossiam ETF Emerging Markets Minimum Variance NR (GBP) (LMMV) and the Ossiam ETF Emerging Markets Minimum Variance NR (USD) (DEMV).

Ossiam’s ETFs represent a total of approximately €346 million in assets under management, as of June 29, 2012.

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