In the current market environment, investors are getting a birds-eye view of how unforeseen events like the coronavirus can upend markets quickly with a heavy dose of volatility. As such, it could help investors to get targeted exposure, which global index, data and analytics provider FTSE Russell provides with the recent introduction of new FTSE Target Exposure indexes.
According to FTSE Russell, these new indexes allow users to achieve, explicit exposure objectives from risk factors, industries and countries, to sustainable investment goals. The new FTSE Russell indexes provide precise alignment between investment exposures and investment objectives.
The indexes allow investors to precisely calibrate exposure to common risk factors such as Value, Quality, Low Volatility, Size and Momentum as well as industry and country classifications. Sustainable investing portfolio objectives such as the United Nations’ Sustainable Development Goals (SDGs) may also be incorporated. The precise control of exposures, including removal of un-wanted factor exposures, permits better control of tracking error to exposure objectives.
The launch represents a natural evolution of FTSE Russell’s factor framework by applying variable factor tilts over time to account for the changing attributes of stocks. Crucially, the indexes maintain the high levels of transparency associated with the FTSE Global Factor Index Series.
Andrew Dougan, Director, Research & Analytics, FTSE Russell said: “As assets tracking single and multi-factor indexes continue to grow rapidly, so too has the appetite for benchmarks designed to precisely meet specific investment objectives through efficient factor allocation over time. FTSE Russell’s new Target Exposure indexes, now available on some of our most widely followed flagship products like the FTSE All-World, is the natural evolution of our factor framework and tilt methodology, increasing choice for customers”.
Factor based investing, often referred to as ‘smart beta’ is growing significantly. FTSE Russell’s 2019 annual smart beta survey found that 58% of institutional investors surveyed have implemented smart beta strategies, up 10% from 2018. Notably, it also found that nearly eight in 10 (78%) asset owners have implemented, are evaluating or plan to evaluate a smart beta index-based strategy.
Multi-Factor ETF Option
For investors who aren’t sure where to start with factors, can take a one-size-fits-all approach. As such, an ETF to consider is the Invesco Russell 1000 Dynamic Multifactor ETF (BATS: OMFL), which shows that multi-factor investing can work in today’s market landscape.
OMFL seeks to track the investment results of the Russell 1000 Invesco Dynamic Multifactor Index. This underlying index is designed to select equity securities from within the Russell 1000® Index, which measures the performance of the 1,000 largest-capitalization companies in the United States.
For more market trends, visit ETF Trends.