Related: Smart ETF Strategies for Building Stronger Portfolios
The underlying customized FTSE Russell index selects components based on a diversified set of factor characteristics, such as relative valuation, price momentum and quality. The enhanced indexing process would allow the ETF to exclude expensive, low quality companies with poor momentum, which could help the ETF diminish drawdowns without sacrificing too much from any potential upside of a market recovery.
Investors can take a look at the evolving ETF industry where factor-based investments could help better manage the risk premium. The strategic beta solutions could neutralize some risks, better diversify a portfolio and potentially generate improved risk-adjusted returns over the long haul.
Financial advisors who are interested in learning more about smart beta strategies can register for the Thursday, September 14 webcast here.