Montreal-based National Bank Investments Inc. (NBI) announced on Friday that it is introducing smart beta funds to its product lineup with the launch of NBI SmartBeta Canadian Equity Fund and NBI SmartBeta Global Equity Fund.
“NBI SmartBeta Funds are at the intersection of active and passive investing, allowing rule-based decisions and active return,” states the firm’s announcement. “The construction rules differ from traditional market cap-weighted indices as they optimize specific factors to select, weigh and rebalance securities in the portfolios systematically. The strategy aims to equalize risk contribution of index constituents and to maximize risk diversification.”
This strategy is known as “equal-risk contribution” and will be implemented by New York-based Rothschild Asset Management Inc., which will subadvise the two funds. The objective of this approach is to reduce volatility, limit maximum drawdowns and improve the Sharpe ratio for the two funds.
“True to our client-centric values and putting into practice our open architecture platform, we forged a new partnership with Rothschild Asset Management, giving Canadian investors access to a unique approach on smart beta investing,” says Jonathan Durocher, president and CEO of NBI. “We believe that many investors continuously look to optimize the risk/return relationship of a specific market cap-weighted index. Our SmartBeta solutions will fill a void in the Canadian landscape.”