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New Danish Mutual Fund to challenge low priced ETFs

Assens, Denmark, September 16th 2021

INDEX+ is the name of Denmark’s soon to be cheapest exhange traded mutual fund. According to the fund’s creator it will be both very innovative and at the same time among the lowest priced fund products globally. The Fund shall challenge the increasingly popular american ETFs that have conquered the US fund market and now are moving in on Denmark and the rest of Europe.

A tiny Danish mutual fund being cheaper than even the World’s largest ETF with global stocks. Unlikely, most investment professionals would say. Nonetheless, that was the ambitious plan when Jacob Loiborg last year sat down with boutique advisory Great Dane Fund Advisor to design the mutual fund product of the future.

“Actually, I would prefer that the Total Expense Ratio was 0,0% and that the portfolio manager is only rewarded if he or she delivers the expected excess return. That is almost how we ended up. But, despite the significant economies of scale in fund management, there is still a bunch of bills that needs to be paid, so we expect to launch the fund with annual costs of around 0,05% and a TER slightly above 0,11%, says Jacob Loiborg who will be the portfolio manager of the fund.

On top of the 0,05% cost there will be trading costs and a performance fee in case the fund outperforms its benchmark. That makes INDEX+ cheaper than all other Danish mutual funds including the fixed income funds which are normally around half the price of equities funds. The cheapest existing Danish mutual funds that invest globally are priced at 0,3-0,4% and they are pure index trackers that has only one success criteria: Replicate the benchmark return.

Enhanced Index

The fund has been named INDEX+ because its an enhanced index fund. It means that the strategy is not to replicate the benchmark portfolio and returns – but instead to outperform the benchmark by creating systematic over- and underweights of the index constituents while keeping the fund’s socalled Tracking Error at a reasonably low level. The fund aspires to outperform the index by at least 0,5% annually while at the same time keeping the T.E. below 1,0%. But, when the assets under management cross one billion DKK, those two numbers will be swapped, and the target excess return is 1,0% and T.E. is 0,5%. – in other words a socalled Information Ratio of 2,0 which is very rare. Thus, INDEX+ is positioned in between active and passive fund strategies.

”You will get the better of two worlds, because our strategy will benefit from the empirical and academically well documented factors Small Cap, Value and Momentum to generate excess return. ESG and Minimum Volatility will help us control the risk. And on top of it all, we have designed an unique rebalancing process that contionusly optimizes the factors and at the same time benefits from short term trading inbalances in the stocks”, explains Jacob Loiborg.

The new fund will launch as a new member of Danish mutual fund family Great Dane. It will open for subscriptions starting September 22nd 2021, and it will start trading on the Nasdaq OMX Copenhagen Stock Exchange on October 11th.

For further commentary, please contact:

Jacob Loiborg, Portfolio Manager r, tlf. +45 30 17 41 35,
Thomas Bastrup, Portfolio Manager & CEO, tlf. +45 24 49 64 75,