Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

2 Multifactor ETFs To Boost Diversification Via A Single Fund

By Investing.com (Tezcan Gecgil/Investing.com )ETFsDec 10, 2020 03:55AM ET
www.investing.com/analysis/2-multifactor-etfs-to-boost-diversification-via-a-single-fund-200547446
2 Multifactor ETFs To Boost Diversification Via A Single Fund
By Investing.com (Tezcan Gecgil/Investing.com )   |  Dec 10, 2020 03:55AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Looking to diversify across asset classes, investment styles, or regions? Multifactor exchange-traded funds are worth considering.

There are around 300 multifactor exchange-traded funds listed in the US and the number is only likely to increase in the coming quarters.

Each multifactor uses its own unique criteria, giving different weighting to various factors, sectors, or countries.

MSCI (NYSE:MSCI), well-known for its diverse indices, explains that "a factor can be thought of as any characteristic relating a group of securities that is important in explaining their return and risk."

MSCI identifies six equity risk premia factors that historically provided a premium based on academic research including "Value, Low Size, Low Volatility, High Yield, Quality and Momentum." Investors considering a multifactor ETF should research the fund's factors carefully.

Below are 2 multifactor ETFs worth a look:

1. Invesco Russell 1000 Dynamic Multifactor ETF

  • Current Price: $36.66
  • 52-Week Range: $22.00-$39.93
  • Dividend Yield: 1.48%
  • Expense Ratio: 0.29%

The Invesco Russell 1000 Dynamic Multifactor ETF (NYSE:OMFL) provides exposure to a range of large-cap companies in the Russell 1000 index, which represents the top 1000 companies by market cap in the US. These stocks are selected according to market conditions and economic cycles (such as slowdown, contraction, recovery, or expansion).

Fund managers use proprietary tools to observe economic indicator signal changes. The five investment styles, or factors, utilized are value, momentum, quality, low volatility, and size.

OMFL Weekly Chart
OMFL Weekly Chart

OMFL, which has 346 holdings, tracks the Russell 1000 OFI Dynamic Multifactor Index. The index and the ETF are reconstituted and rebalanced as frequently as every month.

The fund started trading in November 2017. The top ten businesses make up around 7% of assets of 1.2 billion. Put another way, no single company is large enough to affect the fund's returns significantly by itself. 11 industry groups are represented in the fund, starting with financials (27.6%), followed by industrials (17.4%), consumer services (16.0%), consumer goods (11.9%), and basic materials (6.0%).

Global media and entertainment group Viacom (NASDAQ:VIAC), equipment rental giant United Rentals (NYSE:URI), healthcare services company Cardinal Health (NYSE:CAH), Delta Air Lines (NYSE:DAL) and IT firm Hewlett Packard Enterprise (NYSE:HPE) are the leading names in the ETF.

Year-to-date, OMFL is up close to 20% and hit an all-time high of $39.93 on Dec. 9. A potential short-term decline toward $37 would offer an improved margin of safety for long-term investors.

2. Hartford Multifactor Developed Markets (ex-US) ETF

  • Current Price: $28.23
  • 52-Week Range: $18.76-$29.74
  • Dividend Yield: 2.68%
  • Expense Ratio: 0.29%

The Hartford Multifactor Developed Markets (ex-US) ETF (NYSE:RODM) gives access to a range of firms in major developed markets of Europe, Canada and of the Pacific Region. Investment factors chosen by fund managers are low valuation (50%), high momentum (30%), and high quality (20%).

RODM Weekly Chart
RODM Weekly Chart

RODM, which tracks the Hartford Risk-Optimized Multifactor Developed Markets (ex US) Index, has 493 holdings. The fund started trading in February 2015 and net assets stand at $2 billion.

In terms of sector allocation, health care and financials have the highest weighting (15% each), followed by consumer staples (13%), industrials (12%), and consumer discretionary (10%) among others. The top names in the fund comprise around 7.5% of the assets.

Denmark-based health care group Novo Nordisk (NYSE:NVO) and Germany-headquartered life sciences business Merck (DE:MRCG), (OTC:MKKGY) are leading names in the fund. In addition, Sweden-based Investor (OTC:IVSBF) is also a top company in the RODM, which holds stakes in several listed and private companies, including other Swedish companies like industrial firms Atlas (NYSE:ATCO) and Copco (OTC:APLKY), technological pioneer ABB (NYSE:ABB), British-Swedish pharmaceutical firm AstraZeneca (NASDAQ:AZN), and telecommunications Ericsson Telefon (NASDAQ:ERIC). Other companies in RODM include: Canadian food retailer Loblaw (TSX:L) and Japanese communications group NTT Docomo (T:9437), (OTC:DCMYY).

Since the start of the year, the fund is down about 4%. Investors who are looking to add international exposure may want to keep the fund on their radar.

2 Multifactor ETFs To Boost Diversification Via A Single Fund
 

Related Articles

2 Multifactor ETFs To Boost Diversification Via A Single Fund

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (4)
Luqman Firdaus
Luqman Firdaus Dec 18, 2020 4:38AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
we your in the goverment C. V. Sakinah Anugerah FirdausGeneral construction, Engineering, trading, supplier, and General contractorDirector Mr M. Luqman Firdaus
Luqman Firdaus
Luqman Firdaus Dec 18, 2020 4:35AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
and money $ 654.000
Luqman Firdaus
Luqman Firdaus Dec 18, 2020 4:35AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
ok darling
Bubba Born
Bubba Born Dec 10, 2020 4:20AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Great in concept but too thinly traded! And no options to be able to even do a covered call! A waste of time!
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email