Should an investor go with quality, momentum, low volatility, size, or value given today’s current market climate? Why not have it all with multi-factor strategies inherent in ETFs focusing on the 1,000 biggest stocks by market capitalization via the Xtrackers Russell 1000 Comprehensive Factor ETF (DEUS ).
DEUS seeks investment results that correspond generally to the performance of the Russell 1000 Comprehensive Factor Index. The fund, using a “passive” or indexing investment approach, seeks investment results that correspond generally to the performance of the underlying index, which is designed to track the equity market performance of companies in the United States selected on the investment style criteria of value, momentum, quality, low volatility, and size.
Smart beta funds don’t have to be intimidating when it comes to factor investing. There’s a lot of jitters in the market given the current pandemic, but choosing the right factor can help ease the anxiety.
The DEUS approach comes in a dynamic, easy-to-trade ETF wrapper that’s conducive for short-term daily or swing traders.
Rather than skewing heavily towards tech, DEUS has holdings from other sectors like healthcare, consumer discretionary, and industrials. While technology is currently a heavy hitter, DEUS doesn’t forget about consumer staples with holdings of companies like Target that will power through a pandemic with basic needs for customers.
More Diversification, Less Cost
Why focus on the Russell 1000 out of all the major indexes in the U.S.? With its focus on 1,000 of the largest market cap companies, the Russell 1000 will give investors access to a diverse array of equities.
Per Investopedia, the index “typically comprises approximately 92% of the total market capitalization of all listed stocks in the U.S. equity market. It is considered a bellwether index for large-cap investing.”
“The Russell 1000 is a much broader index than the often-quoted Dow Jones Industrial Average and Standard & Poor’s (S&P) 500 Index, although all three are considered large-cap stock benchmarks,” the Investopedia article noted. “The Russell 1000 is managed by FTSE Russell. FTSE Russell also manages the Russell 3000 and Russell 2000, as well as numerous alternative indexes derived from each.”
Furthermore, the fund never has more than a 1% allocation to one particular stock based on its holdings as of December 4. You get all that diversification in a low expense ratio of 0.17%.
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