Snag a multifactor exposure without reorganizing your portfolio

Adjusting a portfolio to favor favorable factors in a given market environment does not have to be a daunting task with assets like the Global X Adaptive US Factor ETF (AUSF).

Whether it’s tilting a portfolio towards value, seizing momentum or stifling volatility, AUSF has got you covered for ETF investors. Additionally, AUSF comes with a low expense ratio of 0.27%.

AUSF seeks to provide investment results that generally match the price and performance of the Adaptive Wealth Strategies US Factor Index. The fund invests at least 80% of its total assets in the securities of the index. Its 80% investment policy is not fundamental and requires 60 days written notice to shareholders before it can be changed.

The index is designed to be dynamically split between three sub-indices that provide exposure to US stocks exhibiting the characteristics of one of three main factors: value, momentum and low volatility. AUSF provides investors with:

  • Outperformance potential: AUSF seeks to outperform traditional market capitalization weighted indices by allocating among three factors that have historically demonstrated advantages over major benchmarks. AUSF is up 48% over the past year.
  • Dynamic factor allocation: AUSF allocates either to two factors with a weight of 50% / 50%, or to three factors with a weight of 40% / 40% / 20%, depending on the rolling returns of each factor.
  • Tax efficiency: Dynamic allocation among multiple factors within a single ETF can result in tax savings compared to buying and selling individual factor ETFs.

A good time for a multifactor strategy

The common narrative so far this year has been strength in value versus growth. This could be a good time for a multi-factor strategy, as the S&P 500 Value Index is up almost 10% compared to the Comparable Growth Index.

“Multifactor strategies tend to be particularly effective in times of compression of value gaps,” an Investor Corner Article mentionned. “They can also perform well in times of expanding value spreads, especially when based on more robust sector styles and beta-neutral factors, but still worse than in times of tight spreads. . “

“Interestingly, investing in the best single raw factor with a perfect forecast timing strategy based on the value gap would have barely outperformed the more diverse multifactor composites,” the article adds.

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For more news and information, visit Thematic investment channel.

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