Rydex MSCI ACWI (All Country World Index) Equal Weight ETF began trading today on the NYSE Arca under the ticker symbol EWAC. EWAC provides broad exposure to the companies in the MSCI All Country World Equal Weighted Index, which currently consists of 45 country indices representing 24 developed and 21 emerging market countries.
“EWAC is designed for investors who seek to invest broadly across the global equity markets,” said Mike Byrum, chief investment officer, quantitative strategies for Rydex. “Compared with a traditional cap-weighted index, the equal weight methodology reduces the bias toward the largest constituents and provides broader diversification across all constituents, thereby potentially reducing concentration risk. Through disciplined quarterly rebalancing, EWAC sells those holdings that have appreciated in price and buys those that have not.”
A simple comparison illustrates the difference between cap weighting and equal weighting. As of December 31, 2010, the top ten holdings in the MSCI ACWI Cap-Weighted Index represented 7.75% of the overall portfolio; by contrast, those same top holdings represented just 0.41% of the MSCI ACWI Equal Weighted Index. This example demonstrates how the equal weight methodology broadens diversification and has the potential to reduce the risks associated with a bias toward larger capitalization companies.
Rydex manages over $6 billion in assets across its 34 exchange traded products, including 16 equal weight ETFs. The ETF line-up at Rydex, with the exception of CurrencyShares known in the marketplace as RydexShares R, isSM, and includes nine sector ETFs.
The addition of EWAC as part of the extension of the line-up was announced in December
2010 along with five other new equal weight ETFs, all of which trade on the NYSE Arca:
Rydex Russell 1000® Equal Weight ETF (NYSE:EWRI)
Rydex Russell 2000® Equal Weight ETF (NYSE:EWRS)
Rydex Russell Midcap Equal Weight ETF (NYSE:EWRM)
Rydex MSCI EAFE Equal Weight ETF (NYSE:EWEF)
Equal weight strategies have the potential to deliver strong investment results relative to cap-weighted strategies, as evidenced by Rydex S&P 500 Equal Weight ETF (Ticker: RSP), Rydex’s flagship ETF. Since inception on April 24, 2003, RSP has delivered an annualized return of 9.94% versus 6.39% for its cap weighted index counterpart, the S&P 500 Index, as of December 31, 2010. Rydex MSCI Emerging Markets Equal Weight ETF (EWEM)For additional performance details see charts below.
“Rydex was a pioneer in bringing the equal weight methodology into the mainstream,” said Rich Goldman, CEO of Rydex. “traditional cap-weighted and actively managed core products,” said Rich Goldman, CEO of Rydex. “We are excited to add ACWI as a complement to our diverse equal weight line-up.” For years we have provided clients with compelling alternatives to
Rydex manages approximately $24 billion in assets – including more than $7 billion in exchange traded product assets. Rydex offers institutional investors and financial intermediaries a broad spectrum of traditional and nontraditional investment options that span four distinct disciplines—fundamental alpha (actively managed equity and fixedincome), alternative strategies, target beta strategies and ETFs. For more information call 800.820.0888.
RYDEX S&P EQUAL WEIGHT ETF AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/2010
|1-Year||3-Year||5-Year||Since Fund Inception||Total Expense Ratio||Inception Date|
|Rydex S&P Equal Weight ETF (NAV)||21.32%||1.60%||4.10%||9.94%||0.40%||4/24/2003|
|Rydex S&P Equal Weight ETF (Market Close)||21.39%||1.72%||4.16%||9.93%||0.40%||4/24/2003|
|S&P Equal Weight Index||21.91%||2.45%||4.80%||10.56%||–||–|
|S&P 500® Index||15.06%||-2.86%||2.29%||6.39%||–||–|
Performance displayed represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that when shares are redeemed, they may be worth more or less than original cost. Returns reflect the reinvestment of all dividends. Current performance may be lower or higher than the performance data quoted. For up-to-date fund performance, including performance current to the most recent month end, visit our web site at www.rydex-sgi.com. For additional information, see the fund’s prospectus. ETFs are subject to third party transaction fees/commissions. Net asset value (NAV) is calculated by subtracting total liabilities from total assets, then dividing by the number of shares outstanding. Market close is the last price at which shares are traded. Fund shares may trade at, above or below NAV.
(1)The fund has adopted a distribution (12b-1) plan pursuant to which the fund may bear an annual 12b-1 fee of up to 0.25%.
However, no such fee is currently charged to the fund and no such fees will be charged prior to 3/01/2011.
Index data is for illustration purposes only and is not meant to represent the performance of a particular fund. Index data does not reflect any management fees, transaction costs or expenses. Each index is unmanaged and not available for direct investment. Cap weighted Index data is shown for comparative purposes only.
Diversification neither assures a profit nor eliminates the risk of experiencing investment losses.
ETFs may not be suitable for all investors. ● Investment returns and principal value will fluctuate so that when shares are redeemed, they may be worth more or less than original
cost. Most investors will also incur customary brokerage commissions when buying or selling shares of an ETF. ● Investments in securities and derivatives, in general, are subject to market risks that may cause their prices to fluctuate over time. ● ETF Shares may trade below their net asset value (“NAV”). The NAV of shares will fluctuate with changes in the market value of an ETF’s holdings. In addition, there can be no assurance that an active trading market for shares will develop or be maintained. ● Tracking error risk refers to the risk that the Advisor may not be able to cause the Fund’s performance to match or correlate to that of the Fund’s Underlying Index, either on a daily or aggregate basis. Tracking error risk may cause the Fund’s performance to be less than you expect. ● International ETFs investments in foreign instruments may be volatile due to the impact of diplomatic, political or economic developments on the country in question. Additionally, the fund’s exposure to foreign currencies subjects the fund to the risk that those currencies will decline in value relative to the U.S. dollar.
For more complete information regarding RydexShares, call 800.820.0888 for a prospectus and a summary prospectus (if available). Investors should carefully consider the investment objectives, risks, charges and expenses of a fund before investing. The Fund’s prospectus and its summary prospectus (if available) contains this and other information about the Funds. Please read the prospectus and summary prospectus (if available) carefully before you invest or send money.
Rydex|SGI funds are distributed by Rydex Distributors, LLC (RDL). Security Investors, LLC (SI) is a registered investment advisor, and does business as Security Global InvestorsSM and Rydex Investments. SI and RDL are affiliates and are subsidiaries of Security Benefit Corporation, which is wholly owned by Guggenheim SBC Holdings, LLC, a special purpose entity managed by Guggenheim Partners, LLC, a diversified financial services firm with more than $100 billion in assets under supervision.
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The Russell Midcap® Equal Weight Index, Russell 1000® Equal Weight Index and the Russell 2000® Equal Weight Index are trademarks of Russell Investment Group and have been licensed for use by Rydex|SGI and its affiliates. Neither Russell’s publication of the Russell indices nor its licensing of its trademarks for use in connection with financial products derived from a Russell index in any way suggest or imply a representation or opinion by Russell as to the attractiveness of investment in any securities or other financial products based upon or derived from any Russell index. Russell is not the issuer of any such securities or other financial products and makes no expressed or implied warranties of merchantability or fitness for any particular purpose with respect to any Russell index or any data included or reflected therein, nor as to results to be obtained by any person or any entity from the use of the Russell index or any data included or reflected therein.
The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities or any index on which such funds or securities are based. The prospectus contains a more detailed description of the limited relationship MSCI has with Rydex|SGI and any related funds.