Both LRGF and INTF’s underlying indices screen for four well-known investment factors, including value, quality, momentum and low size, to focus on financially healthy firms, stocks that are inexpensive, smaller companies and trending stocks to potentially enhance returns and diminish risks.
The multi-factor ETFs seek “to maximize exposure to factors that have historically outperformed the broad market (quality, value, size and momentum), while maintaining a similar level of market risk,” according to BlackRock’s iShares.
Additionally, the BlackRock strategists prefer the momentum and value stand-alone factors.
“We prefer momentum (stocks trending higher) in today’s economic environment. We also see potential for the value factor (the cheapest corners of the market) to perform well in coming quarters against a backdrop of stable cyclical expansion.
For momentum exposure, ETF investors can look at something like the iShares MSCI USA Momentum Factor ETF (NYSEArca: MTUM) and iShares MSCI International Developed Momentum Factor ETF (NYSEArca: IMTM), which screen for stocks with relatively high price momentum.
Additionally, the iShares Edge MSCI USA Value Factor ETF (NYSEArca: VLUE) and iShares Edge MSCI Intl Value Factor ETF (NYSEArca: IVLU) screen for stocks with lower valuations based on fundamentals.