Volatility is a reoccurring hurdle that has weighed on investment portfolios. However, investors can utilize disciplined smart-beta index based exchange traded funds (ETFs) as a way to better control the risks.
On a complimentary upcoming webcast this Thursday, J.P. Morgan’s Market Outlook and ETF Strategy for 2016, Jillian DelSignore, Executive Director and Head of ETF Distribution at J.P. Morgan Asset Management, Andrew D. Goldberg, Managing Director and Global Market Strategist at J.P. Morgan Funds Management, Philip Blancato, CEO and President of Ladenburg Thalmann Asset Management, and Brad Zucker, Senior Product Manager of Alternatively Weighted Indexes at FTSE Russell, will discuss how volatility has played a role in the market and ways to control volatility in an investment.
For example, J.P. Morgan offers a suite of Diversified Return Equity ETFs, such as the JPMorgan Diversified Return Emerging Markets Equity ETF (NYSEArca: JPEM), JPMorgan Diversified Return Global Equity ETF (NYSEArca: JPGE), JPMorgan Diversified Return International Equity ETF (NYSEArca: JPIN) and JPMorgan Diversified Return US Equity ETF (NYSEArca: JPUS).
The underlying indices diversify risks that are less likely to be rewarded while overweighting areas that are more likely to be rewarded. The underlying customized FTSE Russell indices select components based on a diversified set of factor characteristics, such as relative valuation, price momentum and quality. Through the multi-factor indexing methodology, the smart-beta ETFs can provide improved risk-adjusted returns over traditional market cap-weighted benchmarks.[related_stories]
Specifically, the enhanced indexing process would allow the ETFs to exclude expensive, low quality companies with poor momentum, which could help the ETFs diminish drawdowns without sacrificing too much from any potential upside of a market recovery.
The alternative indexing methodology also helps the ETFs provide diversified exposure to the various markets. For instance, compared to the MSCI Emerging Market Index, JPEM includes smaller weights towards trouble spots like China 18.9% and Russia 0.2% while overweighting stronger areas like India 8.8%, Indonesia 4.9%, Malaysia 5.8% and Philippines 3.4%.
Financial advisors who are interested in learning more about smart-beta ETF strategies to help control market volatility can register for the Thursday, May 12 webcast here.