Multi-factor indexes from global index provider FTSE Russell help illustrate the key characteristics that are enabling certain US large-cap stocks to experience higher returns than the US large-cap market in 2016 as of September 30.
According to FTSE Russell, its series of three focused factor indexes, which are based on the US large-cap Russell 1000 Index and capture exposure to US large-cap stocks exhibiting greater low volatility, yield or momentum characteristics, have outperformed the Russell 1000 Index year-to-date.
Ken O’Keeffe, managing director, global ETPs, FTSE Russell:
“Our clients are using smart beta indexes as tools to help them pursue a wide range of their objectives, notably higher dividend yields, lower volatility, return enhancement and diversification. And our analysis continues to show that combining multiple factors, not just a single factor, in a smart beta index can help market participants see the benefits of diversification across a number of factors which perform differently across different time periods.”
Furthermore, following FTSE Russell’s unique “tilt-tilt” methodology, each FTSE focused factor index is designed to capture exposure to additional market factors through tilts toward quality, value and size.
And, of these three indexes, the Russell 1000 Yield Focused Factor Index has had the highest performance year-to-date as of September 30, rising 16.5%.
David Mazza, Head of Research, SPDR ETFs & SSgA Funds, State Street Global Advisors:
“The Russell 1000 Yield Focused Factor Index and Russell 1000 Low Volatility Focused Factor Indexes have outperformed the Russell 1000 Index in 2016, while the Russell 1000 Momentum Focused Factor Index has had a similar performance as the Russell 1000 Index. This index data indicates an investor preference for bond-like stocks in 2016 as investor sentiment remains uncertain.”
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