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The ‘smart beta’ frenzy has taken the ETF world by storm with regular introductions of factor-based products. Simply put, no one takes interest in plain vanilla ETFs or market-cap weighted ETFs anymore as products need to dynamic in the fast-changing investing space.
As the name suggests, this approach calls for a strategic take on portfolio construction rather than a market-cap oriented method. The approach helps exploit market anomalies by incorporating additional selection criteria to the market cap or rules-based indices. This enables them to generate market-beating returns. Many people call this an enhanced investing strategy.
The global markets including the United States are likely to experience volatility ahead owing to escalating geo-political tensions and changes in economies’ fiscal and monetary policies. Against this backdrop, investors may look for smart stock-selection strategies to alleviate market risks.
Different kind of investing techniques win at different times. While growth ETFs perform better in an easy-money era amid upbeat economic sentiments, value ETFs excel in an edgy investing backdrop (read: Behind Rise of Smart Beta Bond ETFs).
This is why we have cherry-picked some ETFs that beat SPDR S&P 500 ETF (SPY - Free Report) (up 85.4%) over the last five years (as of Dec 7, 2017). These ETFs proved their mettle over the long term and can thus prove profitable, irrespective of market conditions.
Oppenheimer Financials Sector Revenue ETF – Up 120.7%
This can be a quality pick as it focuses on revenues — apparently a better indicator to measure a company’s financial health. Plus, financial ETFs could a good bet as we are gradually stepping into a rising rate environment (read: Tap Q3 Growth with Revenue-Weighted ETFs).
This ETF holds 67 stocks in its basket. The product failed to garner investors’ attention as depicted by its AUM of $37.6 million. It charges 0.45% in expense ratio. It yields about 1.01% annually.
PowerShares Dynamic Large Cap Growth (PWB - Free Report) – Up 116.5%
As the global economy is on the mend, growth ETFs make promising bets. The 50-stock fund has amassed about $521.0 million. The fund is heavy on the Information technology sector. It charges 57 bps in fees annually (read: Buy 5 Top-Ranked ETFs on High P/E for Further Gains).
PowerShares S&P 500 High Beta Portolio (SPHB - Free Report) – Up 96.6%
The $306.9-million fund holds 100 stocks in the portfolio. Financials hold about 36.8% of the portfolio while technology, industrials and consumer discretionary round out the top four spots. The fund charges 25 bps in fees (read: Time for High Beta & Momentum ETFs?).
Guggenheim S&P 500 Pure Value (RPV - Free Report) – Up 94.7%
This 107-stock fund has amassed about $857.7 million in assets. The fund is heavy on financials, followed by consumer discretionary and health care. The expense ratio of the product is 0.35% (read: 4 Bargain ETFs in a Pricey Market).
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4 Smart Beta ETFs for Long Term Investors
The ‘smart beta’ frenzy has taken the ETF world by storm with regular introductions of factor-based products. Simply put, no one takes interest in plain vanilla ETFs or market-cap weighted ETFs anymore as products need to dynamic in the fast-changing investing space.
As the name suggests, this approach calls for a strategic take on portfolio construction rather than a market-cap oriented method. The approach helps exploit market anomalies by incorporating additional selection criteria to the market cap or rules-based indices. This enables them to generate market-beating returns. Many people call this an enhanced investing strategy.
The global markets including the United States are likely to experience volatility ahead owing to escalating geo-political tensions and changes in economies’ fiscal and monetary policies. Against this backdrop, investors may look for smart stock-selection strategies to alleviate market risks.
Different kind of investing techniques win at different times. While growth ETFs perform better in an easy-money era amid upbeat economic sentiments, value ETFs excel in an edgy investing backdrop (read: Behind Rise of Smart Beta Bond ETFs).
This is why we have cherry-picked some ETFs that beat SPDR S&P 500 ETF (SPY - Free Report) (up 85.4%) over the last five years (as of Dec 7, 2017). These ETFs proved their mettle over the long term and can thus prove profitable, irrespective of market conditions.
Oppenheimer Financials Sector Revenue ETF – Up 120.7%
This can be a quality pick as it focuses on revenues — apparently a better indicator to measure a company’s financial health. Plus, financial ETFs could a good bet as we are gradually stepping into a rising rate environment (read: Tap Q3 Growth with Revenue-Weighted ETFs).
This ETF holds 67 stocks in its basket. The product failed to garner investors’ attention as depicted by its AUM of $37.6 million. It charges 0.45% in expense ratio. It yields about 1.01% annually.
PowerShares Dynamic Large Cap Growth (PWB - Free Report) – Up 116.5%
As the global economy is on the mend, growth ETFs make promising bets. The 50-stock fund has amassed about $521.0 million. The fund is heavy on the Information technology sector. It charges 57 bps in fees annually (read: Buy 5 Top-Ranked ETFs on High P/E for Further Gains).
PowerShares S&P 500 High Beta Portolio (SPHB - Free Report) – Up 96.6%
The $306.9-million fund holds 100 stocks in the portfolio. Financials hold about 36.8% of the portfolio while technology, industrials and consumer discretionary round out the top four spots. The fund charges 25 bps in fees (read: Time for High Beta & Momentum ETFs?).
Guggenheim S&P 500 Pure Value (RPV - Free Report) – Up 94.7%
This 107-stock fund has amassed about $857.7 million in assets. The fund is heavy on financials, followed by consumer discretionary and health care. The expense ratio of the product is 0.35% (read: 4 Bargain ETFs in a Pricey Market).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>