Sector ETF Strategies to Manage Risk and Enhance Returns | ETF Trends

With a changing market environment, many investors are looking to sectors to take a targeted approach to managing risks and enhancing returns.

On the upcoming webcast, Sector ETF Strategies to Manage Risk and Enhance Returns, Steve Deroian, Head of ETF Strategy at John Hancock Investments, and Peter Dillard, Chief Data Officer and Head of Investment Analytics and Data for Dimensional Fund Advisors, will outline how financial advisors can incorporate sector-specific investments to best position portfolios for today’s market.

For example, investors can look to sector-specific, smart beta ETFs to take a more targeted approach with their portfolios, including the John Hancock Multifactor Consumer Discretionary ETF (NYSEArca: JHMC), John Hancock Multifactor Financials ETF (NYSEArca: JHMF), John Hancock Multifactor Healthcare ETF (NYSEArca: JHMH), John Hancock Multifactor Technology ETF (NYSEArca: JHMT), John Hancock Multifactor Consumer Staples ETF (NYSEArca: JHMS), John Hancock Multifactor Energy ETF (NYSEArca: JHME), John Hancock Multifactor Industrials ETF (NYSEArca: JHMI), John Hancock Multifactor Materials ETF (NYSEArca: JHMA) and John Hancock Multifactor Utilities ETF (NYSEArca: JHMU).

The underlying indices’ methodology are managed by Dimensional Fund advisors, a pioneer in applying insight from academic research to a systematic investment process that pursues higher expected returns through advanced portfolio design and implementation.

The smart-beta ETFs follow a rules-based selection process that is seen as a multi-factor approach, combining a number of factors in a single portfolio. Securities are adjusted by relative price and profitability. The underlying indices may overweight stocks with lower relative prices and underweight names with higher relative prices. The indices can also adjust for profitability by overweighting stocks with higher profitability and underweighting those with lower profitability.

The underlying indices also implement market-capitalization adjustments where they increase the weights of smaller companies within the eligible universe and decrease the weights of larger names. The weighting methodology help the ETFs follow a more equal-weight tilt with greater exposure to smaller companies than traditional market-cap weighted index funds in an attempt to capture the size premium and limit risks associated with high-flying, large-cap stocks that may be overbought in an ongoing bull market rally.

Financial advisors who are interested in learning more about sector strategies can register for the Tuesday, April 2 webcast here.