ETF investors can also target value through factor-specific smart beta ETF plays like the J.P. Morgan U.S. Value Factor ETF (NYSEArca: JVAL). The ETF follows a rules-based approach that matches Russell 1000 sector weights and selects stocks based on relative valuation metrics in an attempt to provide exposure to less expensive securities while mitigating stock specific risk.
Rogers also highlighted the fact that various equity market factors may perform differently over time, so investors may do well by combining the various factors to provide a smoother ride over the long-haul, especially when compared to traditional market cap-weighted indexing methodologies that may expose investors to the largest and often priciest company stocks in the market.
For example, the benchmark Russell 1000 Index concentrates 56% of risk in its largest 100 stocks. Looking at the sector breakdowns, the index concentrates 38% of risk to its overweight technology sector exposure.
Beyond single factor-specific strategies, J.P. Morgan also offers diversified multi-factor smart beta ETFs, such as the JPMorgan Diversified Return US Equity ETF (NYSEArca: JPUS). JPUS incorporates multi-factor screens for value based on as dividend yield and book-to-price; momentum based on return-on-equity; and quality based on total return divided by the standard deviation of daily local returns over one year.
Along with JVAL, J.P. Morgan expanded on its line with cheap single-factor strategies, including the J.P. Morgan U.S. Quality Factor ETF (NYSEArca: JQUA), J.P. Morgan U.S. Momentum Factor ETF (NYSEArca: JMOM), J.P. Morgan U.S. Minimum Volatility ETF (NYSEArca: JMIN) and J.P. Morgan U.S. Dividend ETF (NYSEArca: JDIV).
Additionally, J.P. Morgan’s Diversified Return Equity suite include the multi-factor options like JPMorgan Diversified Return Emerging Markets Equity ETF (NYSEArca: JPEM), JPMorgan Diversified Return Global Equity ETF (NYSEArca: JPGE), JPMorgan Diversified Return Europe Equity ETF (NYSEArca: JPEU), JPMorgan Diversified Return Europe Currency Hedged Equity ETF (NYSEArca: JPEH), JPMorgan Diversified Return International Equity ETF (NYSEArca: JPIN) and JPMorgan Diversified Return International Currency Hedged Equity (NYSEArca: JPIH).
Financial advisors who are interested in learning more about factor investing to hedge risks can watch the webcast here on demand.