However, equities come with their own set of risks, but Yasmin Dahya, Executive Director of J.P. Morgan Asset Management, contends that investors can diminish risk and still maintain enhanced returns through smart beta or alternative index-based ETF strategies.
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For example, investors looking to capture some of the cheap valuations and growth opportunities in international markets can look to the JPMorgan Diversified Return International Equity ETF (NYSEArca: JPIN), which diversifies risk through a risk-weighting process that lowers exposure to historically volatile regions and sectors, along with screening stocks based on value, size, momentum and low volatility factors to drive strong performance.
“When these factors are combined, risk and return outcomes can be improved,” according to J.P. Morgan.
Since its inception in November 2014 through the end of 2016, JPIN has gained 1.7%, compared to the cap-weighted FTSE Developed ex North America NR USD Index’s -0.8% return.
Financial advisors who are interested in learning more about factor-based, smart beta strategies can watch the webcast here on demand.