VWI is built around Arch Indices' proprietary Variance Optimized Indexing (VOI) methodology, a dynamic portfolio construction approach that weights each security in its underlying universe by taking into account its yield, volatility, and correlation to the rest of the portfolio.
NEW YORK, Oct. 5, 2023 /PRNewswire-PRWeb/ -- Investors and advisors concerned with meeting long-term investment goals while seeking to minimize volatility have a powerful new portfolio building block at their disposal today with the launch of the Arch Indices VOI Absolute Income ETF (NYSE Arca: VWI), the first Exchange Traded Fund from the experienced team at Arch Indices.
VWI is built around Arch Indices' proprietary Variance Optimized Indexing (VOI) methodology, a dynamic portfolio construction approach that weights each security in its underlying universe by taking into account its yield, volatility, and correlation to the rest of the portfolio.
"At their core, the traditional means of weighting passive portfolios, whether by market capitalization, equal weight, inverse rank, free-float, etc., are arbitrary in their approach and in the exposures they provide; baskets of assets selected because they fit a certain description, with little to no consideration given to how the assets in that basket may interact with, or counteract, one another," said Yang Tang, co-founder of Arch Indices. "What's needed, particularly for the long-term, goal-focused, risk-concerned investor, is a more dynamic approach and that is exactly what we have built at Arch Indices. We're very excited to be bringing our first fund to market, particularly at a time of such heightened macro uncertainty and volatility."
Underpinning VWI is the Arch Indices VOI Core Absolute Income Index, which consists of dividend stocks and fixed income ETFs weighted with the goal of maximizing income while minimizing volatility.
To be eligible for inclusion in the Index, equity securities must meet a number of requirements, including having a minimum market cap of $2 billion, minimum daily average trading volume, minimum 3% dividend yield, and a five-year track record of regular dividend payments. Bond ETFs are chosen based on a range of factors, including their historical correlation to equities.
All eligible securities are then weighted using the VOI methodology, first by sector into sub-indices and again using the VOI approach into the main index. The ETF dynamically rebalances quarterly to reflect changing market conditions and is optimized for income. VWI seeks to benefit from the capital appreciation potential of quality dividend paying stocks, combined with the potential for volatility reduction provided by fixed income ETFs. Minimizing volatility provides a key source of liquidity in the event of an equity risk-off scenario through reduced drawdowns. The resulting portfolio is designed to deliver a goal-focused income solution with effective volatility reduction.
"Through this approach, we aim to deliver investors an optimized alternative to the static asset allocation models they have for too long been forced to choose from," continued Tang. "Just as so many advisors are embracing the concept of goal-based financial planning, we believe now is the right time to bring a goal-oriented strategy such as this to the market. With so many active ETFs having come to market recently, we thought it was important to show how to make passive better. This is the next step in the evolution of the passive investing category, and we could not be more excited to be leading this charge."
Additional information on the VWI ETF, including holdings and expenses, can be found here.
About Arch Indices
Arch Indices was founded with the mission to empower all investors to achieve their financial goals through the next generation of dynamic index solutions. The firm is the creator of Variance Optimized Indexing (VOI), a proprietary methodology designed to optimize the weightings of assets in a portfolio. VOI weights assets to maximize the portfolio goal while minimizing volatility by taking into account three factors: 1) the goal to maximize; 2) asset volatility; and 3) asset correlation to the rest of the portfolio. Arch Indices uses VOI to construct model portfolios and custom index solutions. To learn more, please visit www.archindices.com.
Important Disclosures
The Fund's investment objectives, risks, charges, and expenses must be considered carefully before investing. The statutory and summary prospectus contain this and other important information about the investment company and can be obtained by calling +1 (646) 389-2422. Please read it carefully before investing.
ETFs are subject to additional risks that do not apply to conventional mutual funds, including the risks that the market price of an ETF's shares may trade at a premium or discount to its net asset value, an active secondary trading market may not develop or be maintained, or trading may be halted by the exchange in which they trade, which may impact an ETF's ability to sell its shares. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the ETF. Brokerage commissions will reduce returns.
The Fund's investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investment by the Fund in lower‐rated and non‐rated securities presents a greater risk of loss to principal and interest than higher‐rated securities. The Fund will invest in foreign securities which involve political, economic and currency risk, differences in accounting methods and greater volatility. The Fund is not actively managed and invests in the securities included in, or representative of, its Index regardless of their investment merit.
The Arch Indices VOI Absolute Income ETF is distributed by Quasar Distributors, LLC.
Media Contact
Chris Sullivan, Craft & Capital on behalf of Arch Indices, 1 2124734442, [email protected], https://www.archindices.com/
SOURCE Arch Indices
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