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Source, a London-based provider of exchange-traded products, has teamed up once again with alternative asset manager GLG Partners, a subsidiary of Man Group, to launch two new active strategy ETFs on the London Stock Exchange.
Focusing on Continental Europe and Asia ex Japan, the Source Man GLG Continental Europe Plus UCITS ETF (MPCE) and Source Man GLG Asia Plus UCITS ETF (MPAS) aim to outperform their respective regional equity markets while limiting active risk.
The funds are based on the same strategy that underlies the firms’ original collaborative effort, the hugely successful Man GLG Europe Plus Source ETF (MPFE).
This fund has proved successful both in terms of assets under management and performance. Launched in January 2011, the fund has accumulated €700 million in assets, making it one of the largest European equity ETFs not linked to a traditional benchmark. Performance-wise, the underlying Man GLG Europe Plus Index has outperformed the MSCI Europe in four of the past five years.
Key to the fund’s success is the underlying strategy. Essentially, the strategy attempts to systematically identify and capture alpha presented in broker ideas provided specifically for GLG. The highest quality ideas from the best-performing brokers are then used to create a liquid, highly diversified equity portfolio. The strategy aims to further improve the returns from the idea contributors by using a variety of algorithms that detect patterns in the ideas received.
Commenting on the launch, Khalil Mohammed, portfolio manager and co-head of equities at Man Group, said: “We believe our strategy has the potential to generate outperformance in both these regions. We have run a Continental European fund since 2009, using the same strategy and with good results. In Asia, our research shows that broker ideas could generate outperformance of between 3 and 8% per annum over the broader Asian equity market.”
Ted Hood, CEO of Source, added: “There is clear and growing demand for this kind of ‘Beta Plus’ strategy. The Man GLG Europe Plus Source ETF has struck a chord with investors, so we are delighted to be offering the same strategy in these two focused regions.”
The Continental Europe fund is traded in GBP and has a total expense ratio (TER) of 0.75%; the Asia fund is traded in USD and has a TER of 0.95%.