Have you ever heard of multi-factor ETFs? We analyze the 3 best products on the market.
Multi-factor strategies represent a sophisticated approach to equity investments, based on the collection and analysis of scientific data relating to the performance of equity securities. These strategies are based on a series of specific observations called "factors", which have emerged from extensive research in the financial markets. The main objective of these strategies is to identify those securities that are expected to outperform the market in the future.
Multi-factor ETFs represent an evolution of these strategies, combining different factors into a single investment vehicle. In many cases, these ETFs invest directly in the relevant stocks. This offers investors a broader diversification opportunity and exposure to a broader range of factors.
It is important to note that some multi-factor ETFs actively manage the factor weights in their portfolio, seeking to adapt to changing market conditions, while others maintain strategic weightings fixed over time. This variation in factor management gives investors different options to consider and makes it interesting to compare different strategies to determine which is best suited to your investment needs.
1. Goldman Sachs ActiveBeta US Large Cap Equity (Acc.)
The Goldman Sachs ActiveBeta US Large Cap Equity USD (Acc.) is an ETF that deserves careful evaluation, especially for investors interested in exposure to large-cap US stocks. Let’s look at the main aspects of this ETF. With assets under management of approximately EUR 50 million (54.6 million USD), the ETF falls into the smaller size category.
With an annual TER of 0.14%, the ETF has a low cost compared to other similar products. This is a positive point for investors, as lower costs can help improve long-term returns.
The ETF uses total physical replication to track the performance of the underlying index. This means that it buys all the components of the index, ensuring a closer correlation with the index itself. This is an advantage for investors looking for an accurate replication of the benchmark index. The fund is USD denominated, which may be an important consideration for investors managing currency risk.
The ETF uses an accumulation policy and the dividends generated by the underlying securities are reinvested in the ETF. This can be advantageous for long-term investors who want to maximize capital growth potential, while it can be a disadvantage for those who want a steady stream of income.
The ETF’s performance has been solid over the years, with a YTD return of +15.44% and a three-year return of +38.38%. However, it is important to note that in 2022 the ETF recorded a negative performance of -13.86%.
The 1-year volatility was 15.11%, while the maximum drawdown since launch was -33.42%. These data reflect the volatile nature of stock markets and highlight the importance of long-term financial planning.
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2. Invesco Quantitative Strategies ESG Global Equity Multi-Factor
The Invesco Quantitative Strategies ESG Global Equity Multi-Factor UCITS ETF EURAcc is a product that deserves careful evaluation, especially for investors interested in an active investment approach with a focus on ESG (Environmental, Social and Governance) and equity factors. With assets under management of approximately EUR 113 million (123 million USD), the ETF enjoys a larger size than other similar funds, which can have a positive impact on its liquidity and its ability to manage the order flow of its investors. investors.
Total expense ratio (TER): The ETF has an annual TER of 0.30%, which is slightly higher than some competitors. However, it should be considered that it is an actively managed ETF, and therefore the cost could be justified by careful management and the search for investment opportunities.
The product uses full physical replication, purchasing all components of the benchmark index. This approach should ensure a close correlation between the performance of the ETF and the index. It uses an accumulation policy, so the dividends generated by the underlying stocks are reinvested in the ETF.
ETF performance has been generally positive over the years, with a YTD return of +14.68% and a three-year return of +30.99%. It should be noted that in 2022, the ETF suffered a negative performance of -14.41%.
The ETF is based on ESG criteria and equity factors, including Momentum, Quality, and Value. This approach may appeal to investors interested in ethical and environmental considerations in their investment strategy.
3. iShares Edge MSCI Europe Multifactor UCITS ETF
The iShares Edge MSCI Europe Multifactor is a product that requires careful evaluation, particularly for investors seeking exposure to developed country equities in Europe using a multi-factor strategy.
With assets under management of EUR 174 million (190 million USD), the ETF enjoys sufficient size, which should help ensure good liquidity and relatively smooth order execution for investors. The ETF has an annual TER of 0.45%, which is average compared to other similar ETFs. This cost should be evaluated based on the investment strategy and expected results.
The product uses a sampling replication and does not purchase all the components of the underlying index but only those deemed most important. This may result in a less close correlation with the performance of the index than a full physical replication.
It offers an accumulation policy, reinvesting the dividends generated by the underlying securities in the ETF, and follows a multi-factor approach based on four styles: Value, Momentum, Quality, and Small Size. This offers investors diversification based on different performance factors
Overall, the ETF has demonstrated solid performance over the years, with a YTD return of +12.68% and a five-year return of +39.15%. However, it should be noted that it recorded a negative performance of -16.59% in 2022, which highlights the importance of proper diversification and understanding market risks.
One-year Volatility was 11.77%, while the maximum drawdown since launch was -37.06%. These data reflect the volatile nature of stock markets and highlight the importance of careful risk management.
In conclusion, the iShares Edge MSCI Europe Multifactor UCITS ETF offers an investment opportunity for those looking for multi-factor criteria diversification in Europe. The fund size is adequate, but investors should carefully consider the TER and type of replication used. Historical performance is positive, but investors should be aware of the risks associated with equity investments and market fluctuations.
| Disclaimer The information and considerations contained in this article should not be used as the sole and principal basis on which to make investment decisions. The reader retains full freedom in his own investment choices and full responsibility in making them since he alone knows his risk appetite and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation for public savings. |
Original article published on Money.it Italy 2023-11-17 18:54:00. Original title: I migliori ETF multi-fattoriali su cui investire
