The momentum factor screens for stocks that have recently performed well and may exhibit some persistence in their outperformance. This allows investors to participate in market trends.
The quality factor follows identifies stocks from companies that have efficiently generated profits over time. This allows investors to gain exposure to companies with strong fundamentals and the potential for consistent returns.
Lastly, the low volatility factor looks for stocks from companies that are likely to avoid extreme swings up and down in price.
The smart beta ETF screens constituents taken from the Russell 2000 based on value, momentum, quality and low volatility and are assigned a so-called factor score based on the specified measurements. Those with a high factor score are given an overweight position in the rules-based index relative to the Russell 2000.
“GSSC is a result of continued investor demand for products that offer a multi-factor investment approach, providing exposure to small cap equities by leveraging our quantitative investment expertise,” Gary Chropuvka, Head of Customized Beta Strategies within the Quantitative Investment Strategies team, said in a note.
For more information on new fund products, visit our new ETFs category.