Getting factor-based strategies can help in the type of tricky market environment that investors are currently experiencing amid rising rates, rampant inflation, and geopolitical factors. One ETF can give investors exposure to 20 factors in one fund: the IQ Chaikin U.S. Large Cap ETF (CLRG).
The seasickness investors are riding out with the major stock market indexes fluxing up and down the way they are could cause many to head towards the sidelines in cash. However, volatility also opens up opportunities to put cash to work.
“With volatility typically comes opportunity, and we’re advising clients to take action,” said Vance Barse, wealth strategist and founder of Your Dedicated Fiduciary.
That said, factor-based strategies can help smooth out the volatility investors are seeing as of late. At the same time, investors may want to capture upside when markets recover after digesting the latest news or economic data.
One option is CLRG, which seeks investment results that track the price and yield performance of the NASDAQ Chaikin Power U.S. Large Cap Index, which is a rules-based, quantitative index designed to enhance an existing index (NASDAQ US 1500 Index) by selecting stocks with the highest Chaikin Power Gauge rating.
The index rebalances and reconstitutes annually and typically consists of 45 to 65 equally weighted securities. Using an equal-weight approach, CLRG is never over-concentrated in a handful of stocks, which helps to mitigate market volatility.
As of December 31, 2021, the fund tilts towards information technology, with healthcare and financials rounding out the top three. A quarterly distribution is also offered, giving the fund a fixed income component as well.
Additionally, getting this multi-factor strategy doesn’t come at a high price. At 25 basis points, the fund comes in below its category average based on averages by ETF Database and FactSet.
Summary of CLRG:
- Smart beta core equity: Seeks to take advantage of opportunities in large-cap equities, utilizing the Chaikin Power Gauge rating to identify top equity prospects.
- Chaikin Power Gauge advantage: Combines fundamentals and technicals to simplify stock selection.
- Proven multi-factor approach: Powerful 20-factor model that uses a systematized rule set to provide a unique blend of active and passive advantages.
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