As more investors seek out ways to diversify their equity exposures, smart beta ETFs are gaining a greater following.
“We’re very, very committed to the growth of smart beta,” Sharon French, Head of Beta Strategies, for OppenheimerFunds, said at the Charles Schwab Impact Conference. “In that, there’s several different categories that you can participate in. The first is fundamentally weighted, which we already are through revenue-weighted strategies. Second is single factor, and the third is multi-factors.”
OppenheimerFunds’ fundamental index-based or revenue-weighted methodology, include options like the Oppenheimer Large Cap Revenue ETF (NYSEArca: RWL), Oppenheimer Mid Cap Revenue ETF (NYSEArca: RWK) and Oppenheimer Small Cap Revenue ETF (NYSEArca: RWJ).
The underlying index implements a rules-based, disciplined smart beta indexing methodology targets known indices like the S&P 500 and tries to improve their performance return through weighting each security in the index by top line revenue. Components are then rebalanced every quarter to keep the Revenue-Weighted indices in line with the companies’ most recently reported revenue levels.
More recently, OppenheimerFunds expanded on its lineup of smart beta strategies with single- and multi-factor ETFs, which include Oppenheimer Russell 1000 Momentum Factor ETF (Cboe: OMOM), Oppenheimer Russell 1000 Quality Factor ETF (Cboe: OQAL), Oppenheimer Russell 1000 Size Factor ETF (Cboe: OSIZ), Oppenheimer Russell 1000 Value Factor ETF (Cboe: OVLU), Oppenheimer Russell 1000 Low Volatility Factor ETF (Cboe: OVOL), Oppenheimer Russell 1000 Yield Factor ETF (Cboe: OYLD), Oppenheimer Russell 1000 Dynamic Multifactor ETF (Cboe: OMFL) and Oppenheimer Russell 2000 Dynamic Multifactor ETF (Cboe: OMFS). The multi-factor ETFs select companies through exposure to a subset of the low volatility, momentum, quality, size and value factors.
The factor ETFs are “for the advisors who feel like they want to put together the persistent factors in a way that’s meaningful to them in their practices that will drive client outcomes,” French said.
As more look for alternative options to diversify away from traditional equity investments like size and style, investors have turned to smart beta or factor-based ETF strategies that enable anyone to gain precise access to academically proven market exposures.
“We believe strongly in factor diversification and have done a lot of work on the academically supported, rewarded factors that are these persistent drivers of return,” French added.
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