In contrast, traditional market-cap-weighted indices may be top heavy and overweight stocks and sectors that have been outpeforming. During a market collapse, these same areas will likely be the hardest hit, dragging on market-cap-weighted fund.
ZLRG holds the highest ranking stocks that have the most significant positive changes in earnings estimates. Additionally, Zacks singles out non-cash components, or accruals, in each company’s reported earnings, selecting firms with the lowest sector-adjusted accruals. [A Small-Cap ETF That Targets Strong Earnings]
ZLRG offers another advantage: The ETF does not rely on just a single investment as a means of driving returns. Rather, it uses multiple factors to generate upside. By employing multiple investment factors rather than isolating just one, some new ETFs can give advisors advantages beyond those offered with traditional market capitalization-weighted funds.
ETFS Zacks Earnings Large-Cap U.S. Index Fund
