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Volatility drives choice of ETFs for iFunds global Fof

iFunds, a franchise of Raymond James Investment Services, has introduced a global growth fund of funds investing in exchange-traded funds.

The MFM iFunds ETF global growth fund provides exposure to single-country or regional ETFs that are weighted according to volatility rather than market cap.

The fund, administered by Marlborough Fund Managers, has a £1,000 minimum investment. Selection of ETFs will be based on a software system developed over 16 years by iFunds investment director Nigel Baynes and IT director Paul Hudson.

The quant-driven system works on the basis that outperforming assets will perform well for some time. The software recognises when outperformance is deteriorating and will automatically cut positions in those assets. The company says this system recently worked effectively for its commodity fund so that, instead of buying more oil, it was selling its positions.

Sales and marketing director Stacey Ash says: “We weight the ETFs in the global growth fund according to volatility rather than market cap, otherwise we could end up with just a lot of a big companies that do not necessarily represent the best value. In our view, weighting the ETFs according to volatility means we end up with better returns and reduces our reliance on major industries.”

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