|Bid||53.90 x 1000|
|Ask||53.92 x 900|
|Day's Range||53.81 - 53.97|
|52 Week Range||49.24 - 59.04|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||0.91|
|Expense Ratio (net)||0.38%|
For a while now, advisors and investors have been hearing more and more about smart-beta exchange-traded funds (ETFs). These are an increasingly prominent part of the ETF landscape with a rather broad definition. In simple terms, smart-beta ETFs are often defined as those funds with indexes that employ methodologies other than weighting stocks by market value, or -- in the fixed income space -- issue size.In other words, a slew of funds can be considered smart-beta ETFs, including equal-weight funds, dividend strategies or ETFs focusing on a specific investment factor. With such a broad definition, it is not surprising that a substantial total of U.S.-listed ETFs -- perhaps 1,000 or more -- can be classified as smart-beta ETFs.While there has been plenty of criticism regarding these funds, data confirm that many asset allocators remain fond of alternatively-weighted funds.InvestorPlace - Stock Market News, Stock Advice & Trading Tips"Notably, in 2019 nearly eight in 10 (78%) asset owners have implemented, are evaluating or plan to evaluate a smart beta index-based strategy," according to FTSE Russell. "In addition, adoption rates increased in Europe, North America and the Asia Pacific region, with growth also recorded in all AUM tiers: less than $1 billion, between $1-10 billion and more than $10 billion." * 7 Stocks Top Investors Are Buying Now Due to investor demand, issuers are not shy about bringing more smart-beta ETFs to market, making identifying the best something of a challenge. There are dozens of credible contenders for this list, but these seven sit near the top of the heap. Smart-Beta ETFs to Buy: WisdomTree U.S. LargeCap Fund (EPS)Expense Ratio: 0.08% per year, or $8 on a $10,000 investment.One thing investors who are new to smart-beta ETFs should note about these funds is that alternatively weighted products usually carry higher fees than their cap-weighted rivals. That said, an increasing number of smart-beta ETFs are also inexpensive. With an annual fee of just 0.08%, the WisdomTree U.S. LargeCap Fund (NYSEARCA:EPS) is in that category.EPS can be an alternative to traditional S&P 500 and broad market index funds because this smart beta ETF holds the 500 largest domestic stocks and weights those components by earnings, not market capitalization.EPS's index "is earnings-weighted in December of each year to reflect the proportionate share of the aggregate earnings each component company has generated. Companies with greater earnings generally have larger weights in the index," according to WisdomTree.EPS has a value tilt, but it has outperformed the S&P 500 Value Index by 1,400 basis points over the past three years. JPMorgan Diversified Return International Equity ETF (JPIN)Source: Shutterstock Expense Ratio: 0.38%Plenty of equity-based smart beta ETFs offer investors the opportunity to add some international diversity to their portfolios. One of the best smart beta ETFs in that group is the JPMorgan Diversified Return International Equity ETF (NYSEARCA:JPIN).JPIN's underlying index, the FTSE Developed ex North America Diversified Factor Index "is a multi-factor index that includes monthly rebalancing, liquidity screens, and turnover constraints," according to J.P. Morgan. International equities in the index are scored and ranked based on value, size, momentum and low volatility factors. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip This smart-beta ETF is a developed market fund so it can be used as an alternative to MSCI EAFE Index strategies. Japan, the U.K. and Australia combine for over 55% of JPIN's geographic weight. Invesco FTSE RAFI US 1000 ETF (PRF)Source: Shutterstock Expense Ratio: 0.39%Closing in on its fourteenth birthday, the Invesco FTSE RAFI US 1000 ETF (NYSEARCA:PRF) is one of the oldest smart-beta ETFs in the U.S. Focused on U.S. stocks, PRF tracks the FTSE RAFI US 1000 Index.That index "is designed to track the performance of the largest U.S. equities, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends," according to Invesco.There is a value tilt with PRF, but this fund has outperformed the S&P 500 and Russell 1000 Value benchmarks over the past three years. About 53% of PRF's holdings are considered value stocks compared to approximately 13% with the growth designation. This smart beta ETF has over $5.5 billion in assets under management and its success spurred the creation of small/mid-cap and international equivalents. Xtrackers MSCI USA ESG Leaders Equity ETF (USSG)Expense Ratio: 0.1%A booming area of the smart-beta ETF universe is socially responsible investing, including environmental, social and governance funds. The Xtrackers MSCI USA ESG Leaders Equity ETF (NYSEARCA:USSG) is one of newest ESG funds, having debuted in March, but with more than $1 billion in assets under management, this is also one of the biggest ESG index funds on the market.Like many of the legacy funds in the ESG arena, USSG uses a familiar strategy of excluding alcohol, tobacco and gambling companies, as well as makers of civilian firearms. One of USSG's biggest advantages in terms of long-term asset growth is its low fee. At 0.1% per year, this smart-beta ETF is one of the least-expensive ESG funds on the market. * 7 Dependable Dividend Stocks to Buy Home to 323 stocks, USSG allocates over 28% of its weight to technology stocks and over 27% of its combined weight to the consumer discretionary and healthcare sectors. While it is too early to judge USSG on performance, millennials' preference for socially responsible investment options bodes well for this fund in terms of adding assets. JPMorgan Diversified Return Emerging Markets Equity ETF (JPME)Source: Shutterstock Expense Ratio: 0.45%There are dozens of emerging markets smart-beta ETFs on the market on the JPMorgan Diversified Return Emerging Markets Equity ETF (NYSEARCA:JPME) is proving to be a solid member of that group. This smart beta fund's methodology is comparable to its developed market counterpart, the aforementioned JPIN.JPME has a five-star Morningstar rating and emerging markets represent fertile territory for investors to consider moving beyond market cap weighting."Some argue that quantitative strategies, which seek to take advantage of human biases, should do better in emerging markets, where knowledge gaps and market inefficiencies are arguably more abundant," according to Barron's.While Chinese stocks represent nearly 22% of JPME's geographic weight, that is underweight compared to cap-weighted emerging markets benchmarks, indicating this smart beta ETF is a fine idea for investors looking to trim China exposure in their developing markets strategies. FlexShares High Yield Value-Scored Bond Index Fund (HYGV)Expense Ratio: 0.37%There are a growing number of smart-beta ETFs in the fixed income space, including funds addressing the corporate bond universe. The FlexShares High Yield Value-Scored Bond Index Fund (NYSEARCA:HYGV) is a way for investors to put some of the advantages of smart beta on their sides when it comes to junk bonds.HYGV follows the Northern Trust High Yield Value-Scored U.S. Corporate Bond Index, which emphasizes value in its bond identification process. However, that methodology does cheat investors out of income, as highlighted by HYGV's 30-day SEC yield of 6.9%. Over 95% of this smart beta ETF's holdings have maturities under 10 years, giving it a duration of just 3.3 years. * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond HYGV "uses innovative security selection and weighting methodologies that focus on maximizing factor inputs for value, while managing other risk factors," according to FlexShares. iShares Edge MSCI USA Quality Factor ETF (QUAL)Expense Ratio: 0.15%Many of the largest smart-beta ETFs are funds dedicated to a single investment factor, and many of those product are growth or value funds. But the iShares Edge MSCI USA Quality Factor ETF (BATS:QUAL) has long since asserted itself in the realm of individual factor strategies. Home to nearly $11 billion in assets under management, QUAL is the dominant name among dedicated quality ETFs.With the business cycle aging and this bull market doing the same, smart beta ETFs focusing on quality stocks can reward investors as highlighted by QUAL's year-to-date gain of more than 23%. QUAL holds 125 stocks with nearly 36% of those names hailing from the technology and healthcare sectors."QUAL seeks to track the investment results of the MSCI USA Sector Neutral Quality Index composed of U.S. large- and mid-capitalization stocks exhibiting quality characteristics as identified through racks U.S. large- and mid-capitalization stocks based on quality screens for three fundamental variables: return on equity, earnings variability and debt-to-equity," according to ETF Trends.As of this writing, Todd Shriber does not own any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post 7 of the Best Smart-Beta ETFs to Target Right Now appeared first on InvestorPlace.
Money managers are tapping into their decades of experience as they adapt time-tested strategies into the efficient exchange traded fund investment vehicle.
Money managers are tapping into their decades of experience as they adapt time-tested strategies into the efficient exchange traded fund investment vehicle. “If you look at the way we’ve built out the ...
With the capital markets turning the page on the first quarter of 2019, investors are regaining their confidence from a rebound in the capital markets after a tumultuous end to 2018. Heading into the early beginnings of Q2, it’s necessary for investors to remain strategic when it comes to deploying capital in the current market environment, especially with respect to selecting exchange-traded funds (ETFs) for their portfolios.
The adage of “change is the only constant” is certainly applicable to the exchange-traded fund (ETF) space. As the number of ETFs continue to grow at a rapid pace, it opens up the arena for innovation in order for issuers to discern themselves and their products from the masses.
With the capital markets turning the page on the first quarter of 2019, investors are regaining their confidence from a rebound in the capital markets after a tumultuous end to 2018. Heading into the early beginnings of Q2, it's necessary for investors to remain strategic when it comes to deploying capital in the current market environment, especially with respect to selecting exchange-traded funds (ETFs) for their portfolios.
With the U.S. in the late stages of the market cycle, more investors are looking into smart beta or factor-based ETFs to better manage risks while still staying in the game.
The adage of "change is the only constant" is certainly applicable to the exchange-traded fund (ETF) space. Gone are the days when ETFs like the SPDR S&P 500 ETF (SPY) for U.S. equities and the iShares Core US Aggregate Bond ETF (AGG) for fixed income was all an investor needed to gain broad-based exposure to the markets. "What I think it means for advisors who are building portfolios is you need more in your toolkit for that kind of environment, both on the, as we've talked about, declining return expectations, but also, the reality of volatility," said Dahya.
"Advisors are looking for a way to shorten up duration, and so one of the most successful conversations we've had this year is around JPST - our ultra-short duration fixed-income ETF. There's really almost a dual use case: somebody trying to pull in and shorten duration in a portfolio or take that one step out from cash to earn a little bit more than what they had been holding as cash on a portfolio," Jill DelSignore, Executive Director and Head of ETF Distribution at J.P. Morgan, said at the Charles Schwab IMPACT 2018 conference. The JPMorgan Ultra-Short Income ETF (JPST) can help investors shorten their duration exposure and provide an alternative for money market exposure.
The Nasdaq Composite, in particular, stumbled by 9.2% in October, making it its second largest decline since it fell 10.8% back in November 2008. After 10 years of market recovery from the Great Recession followed by a historical bull market run, October left investors scratching their heads and wondering whether to sit on the sidelines or stay invested. Investors who were resilient during the Great Recession were treated to the S&P 500 becoming the longest bull market in history.
In the latest update of "In The Know," Yasmin Dahya, Head of Americas Beta Specialists at JP Morgan Asset Management, helps to quell investor fears of where the market is heading. If investors want to be more defensive, Dahya recommends strategies that are not weighted by market capitalization. The JPMorgan Diversified Return US Equity ETF (JPUS) , for example, incorporates multi-factor strategies that gives investors the defensive aspect they need to shield their portfolios from a downturn as well as an offensive component that exposes investors to the factors that are more in favor given present economic conditions.