Marc Zeitoun, Chief Operating Officer, North America, Head of Strategic Beta, Columbia Threadneedle Investments, joined Keith Black, Managing Director of RIA Channel, to discuss the Columbia Research Enhanced Real Estate ETF (CRED) and the Columbia EM Core ex-China ETF (XCEM).
Columbia Threadneedle has over a ten-year track record in quantitative research, which is used to enhance the firm’s ETF offerings. One key finding of the firm’s research is that investors can add value simply by not holding index names that are likely to underperform. Zeitoun explains that market cap weighting may be good for benchmarks, but not necessarily appropriate for an investment portfolio. Because passive products tend to be backward looking and based on past company growth, tomorrow’s best opportunities may not be the companies with today’s largest market capitalization. Zeitoun believes that company weightings in the portfolio should be an outcome of an intensive research process.
Columbia Threadneedle’s CRED ETF uses the firm’s research to enhance real estate investing. The enhancements are designed to remove the bottom performers from the FTSE NAREIT All Equity REITs Index while optimizing weights on each REIT to enhance income, liquidity, and geographic exposure.
Emerging markets stock indices may have a weight on Chinese stocks exceeding 25%. Some investors may wish to allocate to emerging markets without this significant country weight. Columbia Threadneedle’s XCEM is the oldest and cheapest ETF that offers passive exposure to broad emerging markets while excluding holdings of stocks listed in China.