Intelligent Investing with Multi-Factor, Smart Beta ETFs

For instance, the popular Deutsche X-trackers Russell 1000 Comprehensive Factor ETF (NYSEArca: DEUS) underlying index combines five single factors into a multi-factor strategy, including value, size, momentum, low volatility and quality.

FTSE Russell has also helped Deutsche craft a number of so-called Comprehensive Factor Indices to go along with their corresponding smart beta, multi-factor ETFs. Deutsche Asset Management offers a Comprehensive Factor ETF suite, including Deutsche X-trackers FTSE Developed ex US Comprehensive Factor ETF (NYSEArca: DEEF), Deutsche X-trackers Russell 2000 Comprehensive Factor ETF (NYSEArca: DESC) and Deutsche X-trackers FTSE Emerging Comprehensive Factor ETF (NYSEArca: DEMG), along with their flagship DEUS.

Woodham pointed out that clients and investors turning to these multi-factor, ETFs have consistently mentioned higher returns and lower volatility as key selling points for smart beta, index-based funds. Investors would either carve out a piece of their traditional beta exposure or replace a more expensive actively managed fund with a quantitative, multi-factor ETF strategy.

For more on smart beta ETFs, visit our Smart Beta Channel.