Multi-factor exchange traded funds hit some rough spots earlier this year due to value exposure, but the
USMC, which tries to reflect the performance of the Nasdaq US Mega Cap Select Leaders Index, 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. The fund implements a multi-factor indexing methodology during its selection process.
“Since the start of 2020, investors exposed to multi-factor equity strategies have suffered some underperformance. Investors with a long-term investment horizon can view this as a ‘short-term’ event,” according to BNP Paribas research.
December 28, 2020
While 2020 was a trying year for some investment factors, others were mediocre, and even more flourished, a scenario underscoring the utility of multi-factor strategies such as the
USMC, which tries to reflect the performance of the Nasdaq US Mega Cap Select Leaders Index, 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. The fund implements a multi-factor indexing methodology during its selection process.
The fund offers a straight-forward approach relevant to some of its peers. This distinction proves all the more important as the universe of multi-factor ETFs expands.
PSC Fanning the Flames of the Small-Cap Rally
PSC is higher by nearly 8% over the past month. The fund is one of the best-performing small-cap multi-factor exchange traded funds over that period, and on a year-to-date basis.
PSC is worth a look as the economy rebounds from the ill effects of the COVID-19 pandemic. While investors may flock to the relative safety of large-cap equities during a recession to lessen the blow of market volatility and provide a cushion during market downturn, small-cap performance is worth watching as the economy exits a recession. As such, investors may want to give small-cap equity funds a look now to make a factor-oriented play.