The factors are characteristics that are important in explaining the returns and risks of a group of securities, including: mean reversion or stocks that are inexpensive relative to their historical prices; trend following or strong momentum and higher growth potential; risk aversion or financially healthy, stable, and lower volatility companies; and risk seeking or stocks that may be higher volatility.
The active ETF will have exposure to at least five different countries and invest at least 30% of assets of companies outside the U.S.
“The dynamic, multi-factor approach combines the benefits of smart beta and active risk management, representing the next generation of factor investing,” Smalley said. “VGFO allows investors who use smart beta in their portfolios to outsource the factor allocation decision-making to Wellington Management, a highly respected firm whose capabilities span nearly all segments of the global capital markets.”
Current top holdings include Wal-Mart 1.5%, Citigroup 1.1%, Cisco Systems 1.0%, Travelers Cos 0.8%, Gilead Sciences 0.8%, Aflac 0.8%, Johnson & Johnson 0.8%, Nestle SA 0.8%, Fortis 0.7% and Royal Bank of Canada 0.7%.
For more information on new fund products, visit our new ETFs category.