Sanford C. Bernstein & Co., a prominent name on Wall Street known for its sell-side research and brokerage platform, has entered the ETF space with two new strategies that leverage Bernstein research and quantitative alpha models.
On Wednesday, Bernstein partnered up with Exchange Traded Concepts to roll out the Bernstein U.S. Research Fund (BATS: BERN) and Bernstein Global Research Fund (BATS: BRGL). BERN has a 0.50% expense ratio and BRGL has a 0.65% expense ratio.
The Bernstein U.S. Research Fund will try to reflect the performance of the Bernstein U.S. Research Index, which measures the performance of large-cap U.S. stocks rated “outperform” by sell-side analysts at Sanford C. Bernstein & Co and ranked within one of the top three quintiles of Berstein’s published quantitative alpha model, according to a prospectus sheet.
Bernstein analysts assign one of three ratings to each stock: Outperform or stocks expected to outpace the S&P 50® Index by more than 15 percentage points in the 6-12 months ahead; Market-Perform or stocks expected to perform in line with the S&P 500 Index to within +/- 15 percentage points in the 6-12 months ahead; and Underperform or stocks expected to trail the performance of the S&P 500® Index by more than 15 percentage points in the 6-12 months ahead.
The Bernstein quantitative alpha model ranks companies according to expected return over the next twelve months based on three components: stock-specific fundamentals, industry rotation and market risk appetite. Sources of alpha include valuation, capital use, earnings quality, profitability, and growth dynamics.
Similarly, the Bernstein Global Research Fund will try to reflect the performance of the Bernstein Global Research Index, which measures the performance of large-cap global stocks rated outperform by sell-side analysts of Sanford C. Bernstein & Co. and ranked within one of the top three quintiles of Bernstein’s published quantitative alpha model.
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BRGL differs from BERN in that the global option takes components out of the broader MSCI ACWI Index, which contains all countries’ markets, and then implements similar analysis when selecting components.
Since 1967, Bernstein has been widely recognized as one of Wall Street’s premier investment research firms, known for its fundamental research and in-dept Blackbook reports, producing top alpha-generating insights. Furthermore, the firm has adopted deep fundamental research with a disciplined quantitative model overlay to seek out alpha generating opportunities.
“For the past year, we’ve been publishing the results of our research recommendations, including those made as far back as 2004, to hold ourselves accountable and demonstrate to our clients and the market that deep fundamental and quantitative research insights deliver value beyond passive options,” Robert van Brugge, Chairman and CEO of Bernstein, said in a note. “Now, with these ETFs, investors can access our insights directly at a competitive price and in a convenient format.”
For more information on new fund products, visit our new ETFs category.