Growth and innovation within the ETF marketplace has led to an abundance of options available for investors. Parsing through the universe and distinguishing among approaches has become much more challenging.
In the upcoming webcast, It’s Fundamental: The Difference Between Smart Beta and Intelligent Beta, Rene Casis, ETF Portfolio Manager, American Century Investments; Sandra Testani, Director of Product Management – Alternatives and ETFs, American Century Investments; and Hamish Seegopaul, Head of Index Solutions, Axioma, will discuss recent innovations in alternatively-weighted indexes and outline how a focus on company fundamentals can help improve outcomes.
At American Century Investments, investors can browse through intelligent beta strategies, such as the American Century STOXX U.S. Quality Value ETF (NYSEArca: VALQ), American Century Quality Diversified International ETF (NYSEArca: QINT) and American Century STOXX U.S. Quality Growth ETF (NYSEArca: QGRO). The ETFs systematize similar attributes that fundamental research seeks to identify, in a rules-based, indexed approach.
The American Century STOXX U.S. Quality Value ETF incorporates a smart beta strategy reminiscent of actively managed investments and tries to reflect the performance of the iSTOXX American Century USA Quality Value Index, which is made up of 900 largest publicly traded U.S. equity securities screened and weighted by fundamental measures of quality, value and income.
The quality factor screens out the bottom companies based on profitability, earnings quality, management quality and earnings estimate revisions. The valuation score is calculated by the attractiveness of each stock relative to peers in the same industry group based on value, earnings yield and cash flow yield metrics. Lastly, income sustainability is based on dividend growth and dividend coverage applied to eliminate the bottom of the universe of dividend-paying stocks, along with an income score based on dividend-yield computed for the remaining stocks.
QINT and QGRO utilize American Century Investments’ Intelligent Beta methodology, which systematizes many of the same attributes that fundamental research and security selection seek to identify, in a rules-based, indexed approach. QINT is a foreign large blend fund that seeks to enhance core international exposure. Its rules-based approach analyzes each stock’s quality, growth and value characteristics to select individual securities. It also dynamically adjusts exposures in an effort to take advantage of prevailing market conditions.
Financial advisors who are interested in learning more about factor-based investment strategies can register for the Thursday, October 17 webcast here.