Can Factor-Based Strategies Help Mitigate Volatility? | ETF Trends

Factor investing can make it possible to target specific market attributes, which may help mitigate risk, particularly in unsteady markets. In the upcoming webcast, Can Factor-Based Strategies Help Mitigate Volatility?, Craig Lazzara, managing director and core product management at S&P Dow Jones Indices; Nick Kalivas, head of factor and core equity product strategy at Invesco; and Niko Finnigan, partner and net worth advisor at Delta Wealth Advisors, will explore the role that factors can play in helping clients diversify, navigate through volatility, mitigate concentration risk, and more.

For instance, the Invesco S&P 500 Quality ETF (NYSEArca: SPHQ) follows the S&P 500 Quality Index. Member firms are companies from the S&P 500 with impressive quality scores, which are calculated based on three fundamental measures: return on equity, accruals ratio, and financial leverage ratio.

“High-quality companies have always been appealing to investors. In fact, Benjamin Graham documented quality equity investing as early as 1949 in his original publication of The Intelligent Investor,” according to S&P Dow Jones Indices.

The Invesco S&P 500 Low Volatility ETF (SPLV) underlying S&P 500 Low Volatility Index is compiled, maintained, and calculated by Standard & Poor’s and consists of the 100 securities from the S&P 500 Index with the lowest realized volatility over the past 12 months.

SPLV is a “‘pure’ approach to the low-volatility potential advantage. Not all low-volatility approaches are the same,” according to Invesco. “Invesco S&P 500 Low Volatility ETF (SPLV) provides access to the low volatility factor with no sector constraints. It’s a simple and transparent approach that allows SPLV’s underlying index to rotate out of the most volatile sectors at each quarterly rebalancing to provide the potential for upside participation and enhanced risk mitigation.”

Additionally, the Invesco S&P 500 Equal Weighted Portfolio (RSP) is based on the S&P 500 Equal Weight Index, which equally weights the stocks in the S&P 500 Index. Due to its equal weighting methodology, the strategy may lean more toward mid-sized companies, compared to the S&P 500.

Financial advisors who are interested in learning more about factor investment strategies can register for the Tuesday, December 13 webcast here.