While the U.S. economy may be humming along, future market uncertainty is always a wild card. Investors can get some added volatility protection with large cap ETFs.
Despite the recent strength in small and mid caps, large caps can help mute the volatility when markets start to slide. Their reduced sensitivity to the markets relative make them more stable in rough times.
For the growth pundits, there’s the Invesco Dynamic Large Cap Growth ETF (PWB). PWB seeks to track the investment results of the Dynamic Large Cap Growth IntellidexSM Index, which is composed of large-capitalization U.S. growth stocks that the index provider includes principally on the basis of their capital appreciation potential.
PWB is designed to provide capital appreciation while maintaining consistent stylistically accurate exposure. The Style Intellidexes apply a rigorous ten factor style isolation process to objectively segregate companies into their appropriate investment style and size universe.
The Value Option
It’s difficult to talk about growth without also looking at the flip side of the coin. Value has especially showed its strength in recent times.
Investors can take a look at the Invesco S&P 500 Pure Value ETF (RPV) to get value exposure. The fund seeks to track the investment results of the S&P 500® Pure Value Index, which is composed of a subset of securities from the S&P 500® Index that exhibit strong value characteristics.
RPV’s strategy consists of giving securities two “style scores” – one for value and one for growth – based on the characteristics of the issuer. The “value score” is measured using three factors: book-value-to-price ratio, earnings-to-price ratio, and sales-to-price ratio.
The “growth score” is measured using three other factors: three-year sales per share growth, the three-year ratio of earnings per share change to price per share, and momentum (the 12-month percentage change in price). The ratio between the growth score and the value score is used to rank each stock as either deep value, blend, or deep growth, and only the deep value stocks are selected and are factor weighted such that securities demonstrating the strongest value characteristics receive proportionally greater weights.
For more news and information, visit the Innovative ETFs Channel.