Victory Capital offers a line of volatility weighted ETF strategies, such as the VictoryShares US 500 Enhanced Volatility Wtd ETF (CFO), that systematically shifts allocations between stocks and cash to help curb emotional decision-making or provide a systematic, disciplined approach to stocks with a built-in mechanism to shift to cash depending on market conditions.
CFO shifts from a long position to cash position depending on market swings to help investors better manage risk exposure. When the ETF is less than 100% allocated in stocks, assets are invested in cash or 30-day T-bills. The reallocation process is rules-based and determined based on month-end index values.
Additionally, Oppenheimerfunds has a suite of factor-based ETFs, including options like the Oppenheimer Russell 1000 Dynamic Multifactor ETF (Cboe: OMFL) and Oppenheimer Russell 2000 Dynamic Multifactor ETF (Cboe: OMFS), which select companies through exposure to a subset of the low volatility, momentum, quality, size and value factors. Investors may combine the various factors to gain an easy-to-use and quick way to access a diversified market position. This combined factor or multi-factor, smart beta approach may be a good core position for any equity portfolio.
As investors may notice, these types of smart beta or factor-based ETF strategies follow a predefined rules-based indexing methodology that differs greatly from traditional market-capitalization stock index funds. The smart beta strategies may also help diminish risks associated with market-cap weighting methodologies, especially in a prolonged bull market environment.
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