NEW YORK--(BUSINESS WIRE)--ArthVeda Capital, a top-ranked global asset management firm, announced today the launch of its Smart Alpha™ Framework and its initial suite of eight Indexes. Smart Alpha™ is a rules-based, value investing framework that produces a portfolio of low risk, high quality stocks that are available at a discount to intrinsic value.
The Smart Alpha family is composed of Smart Alpha™, Smart Value™ and Smart Income™ Indexes. Each index component is weighted by its discount to intrinsic value, as compared to the float-adjusted market-cap weightings of conventional indexes. ArthVeda Capital is working with the New York Stock Exchange (NYSE), which is providing calculation and dissemination services for its indices in the U.S.
“The major disadvantage of conventional indexes is that, because they are market-cap weighted, they tend to over-allocate to overvalued stocks and under-allocate to undervalued stocks,” said Dr. Vikas Gupta, Executive Vice President and Chief Investment Officer at ArthVeda Capital and the inventor and architect of the Smart Alpha™ concept. “Smart Alpha does the reverse, which tends to produce better performance over the longer term.”
ArthVeda Capital plans to launch options on each of the Smart Alpha™ indexes on the NYSE later this month. In addition, the company is in discussion with several major ETP providers and expects to create investable products in early-2016.
Smart Alpha Indexes consist of stocks that have stable business models, strong balance sheets, a value-creating capital allocation track record and are available at a discount to intrinsic value. They are weighted by each component’s discount to intrinsic value as determined by ArthVeda’s proprietary model.
Smart Income Indexes consist of the top 50 dividend-paying companies from their respective Smart Alpha pools, equally weighted.
Finally, Smart Value Indexes primarily consist of the same stocks which are represented in various major market indexes, weighted based on each component’s discount to intrinsic value as determined by ArthVeda.
The indexes being launched today include:
|Smart Alpha Indexes|
|AUTXA||ArthVeda Smart Alpha™ US Total-cap 50|
|Smart Value Indexes|
|AULVV||ArthVeda Smart Value™ US Large-cap 500|
|ABLVV||Arthveda Smart Value™ UK Large-cap 100|
|AKLVV||ArthVeda Smart Value™ Europe Ex-UK Large-Cap|
|AJLVV||ArthVeda Smart Value™ Japan Large-Cap|
|Smart Income Indexes|
|AUTDI||ArthVeda Smart Income™ US Total-cap 50 Divine Dividend|
|AXLDI||ArthVeda Smart Income™ International Large-cap 50 Divine Dividend|
|AGLDI||ArthVeda Smart Income™ Global Large-cap 50 Divine Dividend|
“We should be clear that these are not smart beta products,” said ArthVeda Director & Chief Executive Officer Bikram Sen. “Rather than adjusting for exogenous factors that may affect business in the short term, we focus entirely on identifying undervalued high quality companies using our patent-pending Smart Alpha™ framework, which differs considerably from low price multiple approaches that are typically associated with value investing.”
Smart Beta indexes often look at external factors such as interest rates, exchange rates, or price-related factors such as momentum, price-to-book and volatility rather than the internal fundamental ratios reflecting the company’s business model and the market price relative to its intrinsic value. While Smart Beta indexes deliver the promised tilt to a portfolio, what is not known is whether, in the future, the factor tilt will deliver the returns it has in the past as more investors embrace the strategies.
“The U.S. launch of our global family of Smart Alpha Indexes™ represents an important new initiative for ArthVeda Capital,” said ArthVeda Chairman & Managing Director Kapil Wadhawan. “As a leading innovator in global asset management, we are looking forward to making our proprietary methodology available to investors in U.S. and International equities through partnerships with leading US-based ETF issuers and asset managers.”
About ArthVeda Capital
ArthVeda Capital is the equities vertical of global asset management firm ArthVeda Fund Management Pvt. Ltd. Established to create rules-based investment solutions grounded in the principles of value investing, ArthVeda Capital applies its proprietary Smart Alpha™ framework to a family of products. The Smart Alpha™ index universe includes all market-caps in both US and international markets. The objective of ArthVeda Capital is to generate forward-thinking investment strategies previously inaccessible through cap-weighted indexes. For more information, please visit www.arthvedacapital.com.
The U.S.: AULVV, AULVVT, AUTXA, AUTXAT, AUTDI, AUTDIT; Europe: AKLVV, AKLVVT; International: AXLDI, AXLDIT; UK: ABLVV, ABLVVT; Japan: AJLVV, AJLVVT; and Global: AGLDI, AGLDIT; (the “Indices”) are calculated by NYSE or its affiliates (“NYSE”).
“NYSE MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EX¬PRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE U.S.: ARTHVEDA SMART VALUE™ US LARGE-CAP 500 INDEX (AULVV, AULVVT), ARTHVEDA SMART ALPHA™ US TOTAL-CAP 50 INDEX (AUTXA, AUTXAT), ARTHVEDA SMART ALPHA US TOTAL-CAP 50 DIVINE DIVIDEND INDEX (AUTDI, AUTDIT); EUROPE: ARTHVEDA SMART VALUE EUROPE EX UK LARGE-CAP INDEX (AKLVV, AKLVVT); INTERNATIONAL: ARTHVEDA SMART ALPHA INTERNATIONAL LARGE-CAP 50 DIVIDEND INDEX (AXLDI, AXLDIT); UK: ARTHVEDA SMART VALUE UK LARGE-CAP 100 INDEX (ABLVV, ABLVVT);JAPAN: ARTHVEDA SMART VALUE JAPAN LARGE-CAP INDEX (AJLVV, AJLVVT); AND GLOBAL: ARTHVEDA SMART ALPHA GLOBAL LARGE-CAP 50 DIVINE DIVIDEND INDEX (AGLDI, AGLDIT) OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL NYSE HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.”
Past performance is not necessarily indicative of future results.
ArthVeda Capital is a Strategic Business Unit of ArthVeda Fund Management Pvt. Ltd. (AVFM). It is not possible to invest directly in an index. AVFM Indices do not sponsor, endorse, sell, or promote any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. This document does not constitute an offer of services in jurisdictions where AVFM Indices does not have the necessary licenses. AVFM Indices receives compensation in connection with licensing its indices to third parties.