Moreover, the fund’s screen process should help diminish risk or exposure to more volatility small-cap securities to help bolster long-term, risk-adjusted returns. The underlying index diversify risks that are less likely to be rewarded while overweighting areas that are more likely to be rewarded.
“The ETF’s multi-factor approach is bearing fruit. After all, U.S. small-caps are lagging large-caps and the value factor is trailing other factors, indicating JPSE’s integration of quality and momentum into the small-cap value equation is compelling for long-term investor,” reports Investopedia.
The alternative multi-factor indexing methodology may help investors diversify away from potential risks associated with traditional market capitalization-weighted indices, such as bubbles, risk concentrations and preference for overvalued stocks.
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