Investor Sentiment Can Drive Factor Performance

He added there’s also an opportunity to start thinking about what are the characteristics of why this might be the case.

“One of the simplest ways is to look at the dividend payout ratio, of all the particular factors,” he said. “We see that they differ significantly. In particular, yield orientated stocks, which may be impacted by rising borrowing costs, when interest rates move up, because they are using their cash flow.”

OppenheimerFunds offers a suite of eight Factor ETFs, in partnership with global index provider FTSE Russell.

Multi-Factor ETFs

  • Provide exposure to a portfolio of stocks that score well for exposure to specific factors, including momentum, value, quality, size, and low volatility.
  • Seek to maximize exposure to these factors, which have historically provided positive risk-adjusted returns over the market.
  • Capitalize on the cyclicality of factor performance by employing a dynamic overlay that looks at leading economic indicators and market sentiment to determine the current market environment and then increases exposure to the factors that tend to fare best in that environment.

Single-Factor ETFs

Financial advisors who are interested in learning more about factor-based investment strategies can watch the webcast on demand by clicking here.