Products August 5, 2011

Rydex Launches Two New S&P Equal Weight ETFs

August 5. 2011 (PLANSPONSOR.com) – Rydex has announced the launch of two new equal weight (EW) ETFs.

 

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According to the announcement, the addition of the two new ETFs – the Rydex S&P SmallCap 600 Equal Weight ETF and the Rydex S&P MidCap 400 Equal Weight ETF – brings Rydex’s total number of EW ETFs to 18 and total number of exchange traded products to 36, with assets over $9 billion.

Rydex S&P Midcap 400 Equal Weight ETF (ticker: EWMD) and Rydex S&P SmallCap 600 Equal Weight ETF (ticker: EWSM) offer what a press release described as “broad exposure” to the companies in the S&P MidCap 400 Equal Weight Index (EWI) and the S&P SmallCap 600 (EWI), respectively. Both EW ETFs invest in the same stocks as their cap weight versions, have equal exposure to each stock and are rebalanced quarterly, according to Rydex.

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“Rydex has been a pioneer in the ETF space since the 2003 launch of our flagship ETF Rydex S&P 500® Equal Weight ETF (RSP),” said Jim King, ETF portfolio manager at Rydex|SGI. “The new ETFs provide investors access to two additional ways to employ an equal weight approach in portfolio construction, allowing them to increase performance potential and diversify holdings,” he said.

Equal weight indices are typically comprised of the same constituents as their cap-weighted equivalents but each component is equally weighted — which Rydex says provides the following potential benefits:

  • Performance Potential. An equal weight approach reduces the bias towards the largest companies within a particular cap-weighted strategy. The smaller companies may help an equal weight strategy outperform when large caps are not in favor, though when large stocks are in favor, equal weight strategies may underperform, according to Rydex.
  • Diversification. While diversification does not assure a profit nor eliminate the risk of experiencing investment losses, Rydex notes that it may help reduce concentration risk and provide more balanced exposure across market capitalizations, sectors and other broad risk factors.
  • Disciplined rebalancing. As portfolios are regularly rebalanced back to equal-weight, they take profits on outperforming components of the index-such as specific companies or sectors. This rebalancing may help balance risk factors and provide enhanced risk control.

Rydex manages approximately $26 billion in assets — including more than $9.5 billion in exchange traded product assets, according to the announcement. 

Benefits August 5, 2011

San Francisco Lawmaker Withdraws Health Care Proposal

August 5, 2011 (PLANSPONSOR.com) - San Francisco lawmakers have voted to drop a measure that would have changed the city’s health care law so that unused amounts contributed to health reimbursement arrangements for employees would be rolled over from year to year.
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The law requires employers with more than 20 employees to spend a certain amount for employee health care coverage, and most satisfy the requirement through payment of health care insurance premiums.  However, employers also can contribute the required amounts to health reimbursement arrangements for employees, from which, at the end of the year, unused funds revert back to the employer, according to Business Insurance.  

Business Insurance reports that last month, David Campos, a member of the San Francisco Board of Supervisors proposed to amend the requirement so that unused HRA funds automatically would roll over to the next year. The proposal was generated by a June report by the city’s Office of Labor Standards Enforcement that found that only 20% of the $62 million allocated to the plans last year was actually reimbursed to employees.   

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Campos withdrew the measure because, observers said, he lacked the votes necessary to approve it.  

Business Insurance said in all, about 13% of employers last year used the HRA approach to satisfy the spending requirement, according to the Office of Labor Standards Enforcement report.

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