How to Utilize Smart-Beta ETFs in Your Portfolio

Additionally, Koenig points to pairing value-tilted methodologies with momentum factors.

“Interestingly individually they tend to have very low correlation and even negative correlation in many instances or over time,” Koenig said. “So by combining a factor strategy based on value and a factor strategy based on momentum, for instance, you can create a very interesting type of dynamic between those two.”

Over the past three months, momentum-focused ETFs like the First Trust Dorsey Wright Focus Five Fund (NasdaqGS: FV) have gained 11.3% and the iShares MSCI USA Momentum Factor ETF (NYSEArca: MTUM) rose 10.2%. Meanwhile, the value ETFs such as the iShares Russell 1000 Value ETF (NYSEArca: IWD) increased 7.9% and Vanguard Value ETF (NYSEArca: VTV) advanced 7.5%.

For more information on strategic beta funds, visit our indexing category.

Max Chen contributed to this article.