Multi-factor indexes from global index provider FTSE Russell that underlie three ETFs from SSGA help illustrate the key characteristics that have enabled certain US large-cap stocks to experience higher returns than the US large-cap market in January, largely continuing performance trends exhibited in 2016.
According to FTSE Russell, two of its series of three focused factor indexes, which are based on the US large-cap Russell 1000 Index and capture US large-cap stocks exhibiting greater yield, momentum or low volatility characteristics, have outperformed the Russell 1000® Index in January.
Furthermore, following FTSE Russell’s unique “tilt-tilt” methodology, each FTSE Russell focused factor index is designed to capture additional market factors through tilts toward quality, value and size.
This follows 2016, in which all three of these indexes outperformed the Russell 1000 Index.
Ken O’Keeffe, managing director, global ETFs, 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.”
Tom Goodwin, senior index research director, FTSE Russell:
“Two of three Russell 1000 Focused Factor indexes outperformed the benchmark Russell 1000 index in January. This follows strong 2016 performance in which all three outperformed the market-cap weighted benchmark. These results highlight the potential benefits of a multi-factor smart beta index that combines multiple factors together in helping to deliver a specific objective to investors.”
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