Amundi launches GDP-weighted ETF to improve diversification

Investment firms are introducing alternative weighting methodologies for Exchange Traded Funds (ETFs) to provide greater diversification beyond traditional market capitalization models.

Amundi has launched the Amundi FTSE All World GDP-Weighted UCITS ETF. Unlike standard global ETFs that weight companies based on their market value—often leading to heavy concentrations in large U.S. technology firms—this fund weights countries and regions according to their Gross Domestic Product (GDP). This approach aims to give larger economic players and less developed markets a more proportionate share in the allocation.

In a similar move toward diversification, equal-weight ETFs are gaining interest. These funds assign the same weight to every company in an index regardless of size, reducing the dominance of mega-cap corporations like Apple or Microsoft. While this strategy can mitigate the impact of sector-specific downturns, it often requires more frequent rebalancing and may incur higher costs compared to market-cap-weighted funds.