The universe of smart beta exchange traded funds continues expanding, both in population and assets under management, and U.S. equities remain fertile ground for issuers bringing fundamentally-weighted strategies to market.
Multi-factor ETFs are increasingly popular, a theme highlighted by an array of ETFs, including the Deutsche X-trackers Russell 1000 Comprehensive Factor ETF (NYSEArca: DEUS). DEUS, which hit an all-time high last Friday, makes accessible to investors a multi-factor strategy previously seen in the world of active management with cost advantages and efficiency of the ETF wrapper.
DEUS selects components based on a broad set of five factors, including quality, value, momentum, low volatility and size.
These factors have been traditionally found in actively managed mutual fund strategies, but as index-based ETF strategies move beyond the traditional market capitalization-weighted methodology, more money managers are crafting customized passive index-based ETFs that incorporate active styles or factors.
The ETF follows the Russell 1000 Comprehensive Factor Index and holds 835 stocks. Factor investing combines low-cost, systematic approach found in passive investments with research driven benchmark outperformance found in actively managed portfolios and cutting edge alpha capture in alternative strategies.