In an ever-changing market environment, equity factor investments experience ebbs and flows. While this cyclicality may frustrate some investors, it offers forward-thinking advisors the opportunity to potentially profit in both the good times and the bad.
In the upcoming webcast, Factor Rotation Strategies May Help You Profit in Varying Market Cycles, Sean O’Hara, President, Pacer ETFs Distributors; and John Lunt, President, Lunt Capital Management, will highlight a factor-based investment strategy that alternates its tilt toward S&P 500 investment factors as the market itself changes.
Specifically, the Pacer Lunt Large Cap Alternator ETF (ALTL) is an index-based ETF that aims to rotate between high-beta and low-volatility stocks listed in the S&P 500 Index.
The high beta index is an index comprised of stocks that are most sensitive to changes in market returns.
The low volatility index is an index comprised of stocks that exhibit lower price volatility than the overall market average.
“Both Low Volatility and High Beta factors have historically exhibited periods of outperformance. The Lunt Capital U.S. Large Cap Equity Rotation Index is innovative because it uses a rules-based strategy to alternate between the High Beta and Low Volatility factors,” according to Pacer ETFs.
Additionally, the Pacer Lunt Large Cap Multi-Factor Alternator ETF (PALC) is a passively managed fund that rotates amongst value, quality, volatility, and momentum stocks within the S&P 500 Index.
A factor is an attribute that can help explain the long-term risks and returns of an asset. Factors can be divided into both high and low factors. Momentum describes the tendency of high-performing stocks to continue performing well in the near future. Quality covers the characteristics that contribute to a company’s durable business model and sustainable competitive advantage. Value is a measurement of a stock’s market value relative to its intrinsic value. Lastly, volatility covers the measurement of variance of returns for a security or index.
Financial advisors who are interested in learning more about the factor rotation strategy can register for the Tuesday, June 22 webcast here.