State Street Global Advisors is readying to write a research paper that will explore the differences between market cap-weighted and equal-weighted exchange-traded funds. Dodd Kittsley, director of ETF research, said the paper will first address indexing as an investing strategy, quantifying the risk of buying a single stock compared to buying an index.
Early results judging the differences in returns from a market cap-weight and an equal-weight ETF shows that equal weighting reduces risk, Kittsley said. SSgA’s recent ETF launches, including six sector ETFs last month, follow equal-weight indexes. “There hasn’t been a lot of research in the industry on [the issue],” Kittsley said.
Kittsley also said that SSgA is planning at least one more hire for its ETF research operation. Kittsley joined SSgA from Morgan Stanley in November to head the department.
Along with publishing a monthly report tracking developments in ETFs, Kittsley is penning an ETF Tactics series for advisors and more in-depth research reports.