JSE Direct with Simon Brown

Podcast: Equal weight needs your vote to be SMART

In JSE Direct, Latest by Simon Brown

Making the CSEW40 SMART

The CoreShares Equal Weight Top40 ETF (JSE code: CSEW40) has long been a favourite of mine, but now CoreShares want to change the ETF to a multi factor ETF under the code SMART.

Those factors are;

  1. Value (portfolios of cheap shares outperform portfolios of expensive shares)
  2. Momentum (portfolios of recent share winners continue to win in the near term)
  3. Size (portfolios of small companies outperform portfolios of large companies) e.g. Equal weight
  4. Quality (portfolios high quality shares outperform poor quality shares)
  5. Low Volatility (portfolios of low risk shares outperform high risk shares)

I chatted to Chris Rule of CoreShares asking why the changes? What will the new methodology be and what’s its attraction? Lastly how will the process work – including voting by existing holders of the ETF.

I initially was too thrilled with the changes as I like the equal weight methodology. But one of the key points for me is how many stocks I effectively get exposure to and this is illustrated by the chart below. with a generic Top40 ETF 12 stocks drive returns. In an equal weight Top40 all 40 stocks drive returns. The new SMART ETF will see 41 out of the 52 stock driving the returns. So I end up with a wide diverse ETF which is exactly what I want.

Shares driving returns

Shares driving returns

Kristia also wrote a blog post on the changes here.

Contact Core Shares;



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JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.


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