LRGF devotes nearly 41% of its combined weight to the technology and healthcare sectors. The fund’s three-year standard deviation of just over 10% is inline with that of the S&P 500.
LRGF “is following a bit more of a complex approach, it uses an optimization framework to basically maximize exposure to all those things while at the same time trying to match the same risk level of the parent index,” said Morningstar. “There is lot of moving parts there. But we think that this is a really good way of getting very potent exposure to factors that we think will pay off over the long term.”
LRGF charges 0.20% per year, or $20 on a $10,000 investment, putting it on the lower end of expenses for U.S. large-cap smart beta strategies.
For more information on multi-factor strategies, visit our smart beta category.