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Factor & Smart Beta ETFs: What You Should Know

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  • (0:45) - Understanding Factor Investing and Smart Beta
  • (10:40) - How Can Investors Use These Strategies To Their Benefit?
  • (17:50) - The Impact Of The Pandemic and Q4 Outlook
  • (25:00) - Why Should You Consider Investing Internationally?
  • (28:45) - Mega Trends of 2020: BlackRock Product Lineup Expansion
  • (36:40) - BlackRock’s Suite of ESG ETFs
  • (42:30) - Episode Roundup: Podcast@Zacks.com

 

In this episode of ETF Spotlight, I speak with Holly Framsted, US Head of Product Segments at BlackRock, the world’s largest asset manager. We discuss factor investing and fourth quarter investment outlook.

Per BlackRock, the factor industry is estimated at $1.9 trillion and is projected to grow to $3.4 trillion by 2022. Academic research shows that long-term stock portfolio performance can be explained by exposure to style factors such as value, size, momentum, low volatility, quality and yield.

Investors now have access to a wide range of single factor and multifactor ETFs from many issuers that provide exposure to these strategies.

The iShares Edge MSCI U.S.A. Quality Factor ETF (QUAL - Free Report) invests in companies with strong and healthy balance sheets, such as Apple (AAPL - Free Report) and Microsoft (MSFT - Free Report) .

The iShares Edge MSCI Min Vol U.S.A. ETF (USMV - Free Report) selects and weights companies to create a portfolio that has lower volatility relative to the broader market. McDonalds (MCD - Free Report) and NextEra Energy (NEE - Free Report) are its top holdings.

The iShares MSCI USA Momentum Factor ETF (MTUM - Free Report) holds stocks with an upward price trend. Tesla (TSLA - Free Report) and Amazon (AMZN - Free Report) are among its top holdings..

Factor returns have generally proven to be highly cyclical. And timing the market is never easy. How should investors use these strategies in their portfolios?

We also discuss how factors have played out during the pandemic and BlackRock’s investment outlook for the fourth quarter. Should investors consider adding some international exposures to their portfolios?

iShares recently expanded its suite of megatrend ETFs that seek to benefit from trends driving the world’s economic, social and technological transformation. To learn more about megatrend investing, please see: Invest in the Future With Megatrend ETFs

They also launched a new suite of ESG screened ETFs. We discuss why investors cannot disregard climate risks. Please visit iSharesto learn more about these ETFs.

Make sure to be on the lookout for the next edition of ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com

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