Deutsche AM Adds Multi-Factor Small-Cap ETF

Deutsche Bank AG (USA) DB's Deutsche Asset Management (Deutsche AM) unit added to its comprehensive factor lineup of exchange-traded funds Tuesday with the debut of the Deutsche X-trackers Russell 2000 Comprehensive Factor ETF DESC.

The Deutsche X-trackers Russell 2000 Comprehensive Factor exchange-traded fund is Deutsche AM's fourth multi-factor ETF. DESC follows the Russell 2000 Comprehensive Factor Index, which targets the value, momentum, quality, low volatility and size investment factors.

A Closer Look

The new ETF devotes over 34 percent of its sector weight to financial services stocks with another 17.4 percent allocated to industrials. Consumer discretionary names account for nearly 16 percent of DESC's weight.

Value, momentum, quality, size and volatility are the most studied investment factors, but the typical application of these factors within exchange-traded funds has been isolation or the combination of two or three of the factors.

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Deutsche AM's other multi-factor ETFs that also follow FTSE Russell indexes include the Deutsche X-trackers Russell 1000 Comprehensive Factor ETF DEUS and the Deutsche X-trackers FTSE Developed ex US Comprehensive Factor ETF DEEF.

Backed By Research

The new ETFs are grounded in long-standing research and thoughtful in the application of value, momentum, quality, size and volatility.

“Academic research has identified certain stocks’ characteristics that are important in explaining a stock’s risk and performance. Emphasizing these factors can potentially make a significant contribution to outperforming traditional market-capitalization weighted benchmark indices,” said Deutsche AM's Fiona Bassett, Head of Passive Strategy in the Americas, in a statement.

DESC charges 0.3 percent on an annual basis, or $30 per $10,000 invested.