The Rising Importance of Factor Investments, Smart Beta ETFs

Now that investors have grown acquainted with traditional beta-index strategies, more are looking into smart beta or factor-based ETFs to diversify their portfolios in changing market conditions.

“In the last year or so, the tune has changed a little bit…. Volatility has increased. Macro uncertainties – you know, globally and potentially here in the U.S – changes investors’ mindsets, changes clients mindsets. So, they are much more open today than they were even a year ago to consider a multi-factor approach,” Matt Straut, Head of RIA Group at OppenheimerFunds, said at the Charles Schwab IMPACT 2018 conference.

Among OppenheimerFunds strategies, investors can look to multi-factor, smart beta tools like the Oppenheimer Russell 1000 Dynamic Multifactor ETF (Cboe: OMFL) and the Oppenheimer Russell 2000 Dynamic Multifactor ETF (Cboe: OMFS).

OMFL and OMFS select companies through exposure to a subset of the low volatility, momentum, quality, size and value factors. Investors may combine the various factors to gain an easy-to-use and quick way to access a diversified market position. This combined factor or multi-factor, smart beta approach may be a good core position for any equity portfolio.