Westwood Holdings Group listed a groundbreaking ETF on Thursday that is designed to limit exposure to authoritarian regimes while maintaining broad market diversification.
The Westwood LBRTY Global Equity ETF (BFRE ) listed on the NYSE today and has an expense ratio of 0.50%.
The fund seeks to track the TOBAM LBRTY All World Equity Index, which implements a methodology that prioritizes companies with minimal reliance on autocratic countries where the rule of law and civil liberties may not be robust. This approach can help investors avoid the unpredictable and sometimes destabilizing nature of authoritarian governments.
A Dual-Layered Approach
The ETF operates on two core principles. First, it excludes stocks from countries lacking democratic governance like China and Russia. Secondly, it prioritizes investments in companies from democratic countries, such as the United States, Canada, the United Kingdom, and France.
At launch, Westwood primarily weighted the fund toward companies in technology, communications, and the consumer goods and services sector.
“Traditional exclusion-based approaches often result in unintended exposures and uncompensated risks," said Westwood Head of Managed Investment Solutions Greg Behar. “By systematically assessing both direct and indirect ties to authoritarian regimes, BFRE offers investors a more precise and effective way to reduce exposure while maintaining a well-diversified, global equity portfolio."
Additionally, Westwood’s own Drew Miyawaki and Shaun Murphy will manage BFRE.
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Growing Market Demand for Geopolitical Risk Management
As global economies become increasingly interconnected, the need for investment strategies that address geopolitical risks has increased accordingly.
“Geopolitical risk is coming back with a vengeance, making this a dangerous time to be exposed to autocratic countries,” said TOBAM CEO Yves Choueifaty.
“BFRE is backed by a wealth of academic research proving the economic superiority of democratic countries. It leverages this research to build sophisticated portfolios designed to improve the long-term risk-reward of our investors by mitigating their exposure to autocratic governments that are prone to destroy value creation,” he added.
The launch of BFRE brings Westwood’s total ETF count to three. In addition, it has $104 million invested across its ETF strategies.
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