Analyst Report
The Nationwide Risk-Based U.S. Equity ETF (RBUS) tracks an index of large-cap U.S. equities. RBUS follows the Rothschild & Co. Risk-Based U.S. Index that aims to deliver on that ever-elusive promise: reduce volatility without sacrificing returns. The index assesses securities for risk and volatility and eliminates the riskiest 50 percent. The remaining securities are weighted by volatility and correlation, in an effort to make sure that every stock contributes the same amount of risk to the portfolio. RBUS has about 250 securities in its portfolio and is rebalanced quarterly.
It’s worth noting that RBUS falls into ETFdb’s Large-Cap Growth category, but that, by design, almost 40% of RBUS’s portfolio is invested in mid-cap stocks. That’s significantly more mid-cap exposure than other index funds in the category, and investors who own ETFs targeting mid-cap companies may want to make sure they avoid an unintentional overweight.
Launched in 2017, RBUS is a latecomer to a crowded space of large-cap growth equities. Nationwide is often the biggest investor in its own ETFs, a common strategy, especially for newer entrants, known as BYOA: Bring Your Own Assets. And while it’s not outrageously prices, there are plenty of cheaper funds out there.
Investors have plenty of alternatives, many with lower fees and more liquidity, such as the iShares Russell 1000 Growth ETF (IWF) or the Vanguard Growth ETF (VUG). Other so-called “smart” U.S. stock index strategies include funds like the Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC) or the JPMorgan Diversified Return US Equity ETF (JPUS). Lastly, investors might want to compare returns with plain-vanilla U.S. funds that charges a fraction of RBUS’s management fee, like the Vanguard Total Stock Market ETF (VTI) or iShares Core S&P500 ETF (IVV).
