While active managers have utilized factor exposures for decades, factor investing has gained popularity more recently with financial advisors and investors following the proliferation of rules-based ETFs.
On the upcoming webcast, Factor Investing 101: An Actionable Guide for Every Investor, Mustafa Sagun, Chief Investment Officer, Principal Global Equities; and Matthew Cohenm Senior ETF Specialist, Principal Global Investors, will share foundational concepts and innovative approaches to help you enhance factor allocation into your own investors’ portfolios.
For example, Principal Global Investors has come out with a suite of multi-factor ETF strategies described as “index-aware and provide a balance of potential outperformance and limited tracking error to established market-cap weighted benchmarks.”
The ETF provider’s most popular strategy, Principal U.S. Mega-Cap Multi-Factor Index ETF (NasdaqGM: USMC), is comprised of companies with the largest market capitalization taken from the Nasdaq U.S. 500 Large Cap Index and screened based on a quantitative model. USMC is a multi-factor fund, an increasingly popular strategy within the broader smart beta universe.
The ETF can potentially provide investors a systematic tilt toward lower historical volatility as a way to provide more stability and better downside protection, along with a highly focused, yet risk-aware, exposure to mega-cap in an attempt to help investors generate better risk-adjusted returns over the long haul.
Principal Global Investors also recently expanded its line with the addition of the Principal U.S. Large-Cap Multi-Factor Core Index ETF (PLC), Principal U.S. Small-Mid Cap Multi-Factor Core Index ETF (PSM), and Principal International Multi-Factor Core Index ETF (PDEV).
PLC is designed to provide broad U.S. large cap equity exposure while incorporating a multi-factor model and modified weighting process to potentially enhance the risk/return profile. The multi-factor model seeks to identify equity securities of companies in the Nasdaq US Large Cap Index that exhibit potential for high degrees of sustainable shareholder yield (value), pricing power (quality growth), and strong momentum.
PSM is designed to provide broad U.S. small, mid-cap equity exposure while incorporating a multi-factor model and modified weighting process to potentially enhance the risk/return profile. Multi-factor model seeks to identify equity securities of companies in the Nasdaq US Small Cap Index and Nasdaq US Mid Cap Index that exhibit potential for high degrees of sustainable shareholder yield (value), pricing power (quality growth), and strong momentum.
Finally, PDEV is designed to provide broad developed international equity exposure while incorporating a multi-factor model and modified weighting process to potentially enhance the risk/return profile. Multi-factor model seeks to identify equity securities of companies in the Nasdaq Developed Market Ex-US Ex-Korea Large Mid Cap Index that exhibit potential for high degrees of sustainable shareholder yield (value), pricing power (quality growth), and strong momentum.
Financial advisors who want to learn more about factor investing can register for the Thursday, September 19 webcast here.
