OppenheimerFunds expanded on its line of smart beta ETFs on Friday with a handful of single-factor and multi-factor strategies that incorporate time tested and academically backed styles to potentially help investors enhance returns and diminish risks.
The new OppenheimerFunds funds include two multi-factor ETFs and six single-factor ETFs:
- Oppenheimer Russell 1000 Dynamic Multifactor ETF (Cboe: OMFL), 0.29% expense ratio
- Oppenheimer Russell 2000 Dynamic Multifactor ETF (Cboe: OMFS), 0.39% expense ratio
- Oppenheimer Russell 1000 Momentum Factor ETF (Cboe: OMOM), 0.19% expense ratio
- Oppenheimer Russell 1000 Quality Factor ETF (Cboe: OQAL), 0.19% expense ratio
- Oppenheimer Russell 1000 Size Factor ETF (Cboe: OSIZ), 0.19% expense ratio
- Oppenheimer Russell 1000 Value Factor ETF (Cboe: OVLU), 0.19% expense ratio
- Oppenheimer Russell 1000 Low Volatility Factor ETF (Cboe: OVOL), 0.19% expense ratio
- Oppenheimer Russell 1000 Yield Factor ETF (Cboe: OYLD), 0.19% expense ratio
Dave Mazza, SVP of Beta Solutions at OppenheimerFunds, explained that these smart beta strategies will help investors achieve three things: The ability to invest directly to historical risk-adjusted returns that are backed by academic and empirical data. A way to access precise exposure to factors to access the markets tactically and strategically. Lastly, the ability to express views an investor may have through excellent tools with low correlation with one another to provide greater diversification.
“The factors have shown over time that they are rewarded,” Mazza told ETF Trends in a call. “They work, quite simply. The factors are extremely robust and extremely time tested.”
Specifically, OMOM focuses on companies in the Russell 1000 Index that exhibit greater price momentum relative to the broader U.S. equity market. OVLU tracks companies in the Russell 1000 Index that exhibit lower valuations relative to the broader U.S. equity market.
OVOL includes companies in the Russell 1000 Index that exhibit lower volatility characteristics relative to the broader U.S. equity market. OSIZ follows companies in the Russell 1000 Index with smaller market capitalizations than the broader U.S. equity market. OQAL targets companies in the Russell 1000 Index that exhibit greater quality characteristics such as return on assets, accruals and leverage relative to the broader U.S. equity market.
Lastly, OYLD is comprised of companies in the Russell 1000 Index with higher yields than the broader U.S. equity market. Each of the single-factor ETFs also come with a competitive annual fee of 0.19%.
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Meanwhile, the multi-factor OMFL selects companies in the Russell 1000 Index through exposure to a subset of the low volatility, momentum, quality, size and value factors. OMFS provides access to companies in the Russell 2000 Index through exposure to the same low volatility, momentum, quality, size and value factors.
Mazza said its two new multi-factor ETFs were truly unique.
“At the highest level when we think about multi-factor, we know that implementing more than one factor in your portfolio has the potential to generate returns above and beyond any single factor because of its diversification benefits,” Mazza said.
Furthermore, Mazza said there is emphasis on each factor that is informed by the economic environment and overall market conditions. The dynamic aspect of the multi-factor OMFL and OMFS is shown through its weighting methodology to its targeted factors during various market cycles. During a recovery faze, size and value are overweighted. In an expansion, the size, value and momentum factors are overweighted. In a slowdown, the volatility and quality styles are emphasized. Lastly, momentum, volatility and quality are emphasized during a contraction. These are also some of the strategies that have traditionally been implemented at OppenheimerFunds.
“Our new Single and Multi-Factor ETFs are an exciting and significant addition to our rapidly expanding suite of smart beta products,” Art Steinmetz, Chairman and CEO, OppenheimerFunds, said in a note. “We believe the combination of GMAG’s regime-based insights and FTSE Russell’s proven methodology is a unique differentiator that will provide our clients with a broad array of options to meet their investment needs.”
To learn more about OppenheimerFunds’ Smart Beta and Factor Investing ETFs and strategy, visit www.oppenheimerfunds.com/investors/interactive/smart-beta.