Principal Global Investors debuted three new factor ETFs on Wednesday described as “index-aware and provide a balance of potential outperformance and limited tracking error to established market-cap weighted benchmarks.”
The new multi-factor ETFs are the Principal U.S. Large-Cap Multi-Factor Core Index ETF (PLC), Principal U.S. Small-Mid Cap Multi-Factor Core Index ETF (PSM), and Principal International Multi-Factor Core Index ETF (PDEV).
Paul Kim, Managing Director, ETF Strategy at Principal Global Investors, said they were excited with the growth and direction of its ETF platform.
“These ETFs provide additional choices for our investors when building portfolios,” Kim said. “The factor ETFs are index-aware and provide a balance of potential outperformance and limited tracking error to established market-cap weighted benchmarks. They are cost-efficient, comprised of multiple factors, and designed for use as core holdings in portfolios.”
Multi-factor Core ETFs are designed to serve as the foundation of an investor’s portfolio, complementing alpha-generating, high active share strategies. As a global asset manager with a heritage of factor investing expertise, Principal now offers a broader set of factor-based strategies to address a wider net of investment objectives and outcomes. PLC, PSM and PDEV were initially developed for RobustWealth, the digital wealth management platform of Principal, to provide their investors with innovative strategic beta strategies with relatively low tracking error and competitive fees but will also be available to the general marketplace.
The portfolio management team for the Funds within Principal’s Global Systematic Solutions team (GSS) maintains innovative factor definitions and combinations that seek to enhance investors’ risk/return profile through outperformance of standard market-cap weighted indices while not increasing risk. Portfolio construction for the Funds combines three distinct factors – shareholder yield, momentum, and quality growth.
PLC is designed to provide broad index-aware U.S. large cap equity exposure while incorporating a multi-factor model and modified weighting process to potentially enhance the risk/return profile. The multi-factor model seeks to identify equity securities of companies in the Nasdaq US Large Cap IndexSM that exhibit potential for high degrees of sustainable shareholder yield (value), pricing power (quality growth), and strong momentum. The Fund’s objective is to track the Nasdaq US Large Cap Select Leaders Core IndexSM.
Next PSM is designed to provide broad index-aware U.S. small, mid-cap equity exposure while incorporating a multi-factor model and modified weighting process to potentially enhance the risk/return profile. Multi-factor model seeks to identify equity securities of companies in the Nasdaq US Small Cap IndexSM and Nasdaq US Mid Cap IndexSM that exhibit potential for high degrees of sustainable shareholder yield (value), pricing power (quality growth), and strong momentum. The Fund’s objective is to track the Nasdaq US Small Mid Cap Select Leaders Core IndexSM.
Finally, PDEV is designed to provide broad index-aware developed international equity exposure while incorporating a multi-factor model and modified weighting process to potentially enhance the risk/return profile. Multi-factor model seeks to identify equity securities of companies in the Nasdaq Developed Market Ex-US Ex-Korea Large Mid Cap IndexSM that exhibit potential for high degrees of sustainable shareholder yield (value), pricing power (quality growth), and strong momentum. The Fund’s objective is to track the Nasdaq Developed Select Leaders Core IndexSM.
For more information, visit www.principalfunds.com.