Factors are cyclical and can require more dynamic real-time adjustments than classic textbook business cycle definitions.
On the upcoming webcast, How to Choose Multi Factor ETFs for Your Clients, Mo Haghbin, SVP and Head of Product of Beta Solutions for OppenheimerFunds, and Irin Kim, AVP of Product Development and Beta Solutions for OppenheimerFunds, will dive into cyclical trends and how a more dynamic approach may help financial advisors better adapt to changing market conditions.
For example, investors can look to multi-factor, smart beta ETF strategies like the Oppenheimer Russell 1000 Dynamic Multifactor ETF (Cboe: OMFL) and Oppenheimer Russell 2000 Dynamic Multifactor ETF (Cboe: OMFS) to diversify an investment portfolio.
These multi-factor ETFs select companies through exposure to a subset of multiple market factors, including low volatility, momentum, quality, size and value factors. Investors can use these multi-factor strategies to capitalize on the cyclicality of factor performance through a dynamic overlay that screens for leading economic indicators and market sentiment to gauge the current market environment and increase exposure to the areas that tend to fare best in the given conditions.
These types of factor-based investments help investors steer away from the potential risks associated with a traditional market-cap weighted fund that can grow top heavy, especially in a prolonged bullish environment.
Along with the dynamic multi-factor ETFs, Oppenheimer also has single-factor based strategies help investors garner targeted market exposures, including the Oppenheimer Russell 1000 Value Factor ETF (OVLU), Oppenheimer Russell 1000 Size Factor ETF (OSIZ), Oppenheimer Russell 1000 Momentum Factor ETF (OMOM), Oppenheimer Russell 1000 Quality Factor ETF (OQAL), Oppenheimer Russell 1000 Low Volatility Factor ETF (OVOL) and Oppenheimer Russell 1000 Yield Factor ETF (OYLD).
These various factors have exhibited specific characteristics that allowed them to outperform their peers. For example, low volatility include stocks that exhibit lower volatility tend to perform better than stocks with higher volatility. Momentum refers to stocks that rise or fall in price tend to continue rising or falling. Value covers stocks that appear cheap tend to perform better than stocks that appear expensive. Quality or higher quality companies tend to perform better than lower quality companies. Size or smaller companies tend to perform better than larger companies. Lastly, yield or higher yielding stocks tend to perform better than stocks with lower yields.
Financial advisors who are interested in learning more about multi-factor strategies can register for the Wednesday, March 27 webcast here.