Power up Your ETF Portfolio: A Factor-Based Approach to Small Caps

The smart beta ETF’s underlying index will identify each security’s ability to outperform market-weighted products and active strategies. The Chaikin Power Gauge is a 20-multi-factor model that screens for value, growth, technical and sentiment factors, such as price-to-book value, return-on-equity, free cash flow, price trends, relative strength, volume trend, earnings growth, earnings trends, projected price/earnings ratio, insider activity, short interest and earnings estimate trends. Many of these factors have been utilized by institutional investors and money managers as a way to manage risk or potentially enhance a portfolio’s return.

The ETF’s sector weights include a hefty tilt toward financials 29.4% and industrials 23.3%, along with consumer services 13.5%, technology 11.7%, consumer goods 10.8%, basic materials 5.5%, health care 3.2%, oil & gas 1.1%, utilities 0.9% and telecommunications 0.5%.

The fund also more-or-less equally weights its holdings, with top components including Hooker Furniture 0.6%, IDT Corp 0.6%, Vectrus 0.6%, Hyster Yale Materials 0.6% and Container Store Group 0.6%.

Financial advisors who are interested in learning more about the Chaikin small-cap strategy can register for the Tuesday, June 6 webcast here.