In another sign of the rapid growth of smart or strategic beta exchange-traded funds BlackRock, Inc. (NYSE: BLK)'s iShares unit, the world's largest ETF issuer, is expanding its already substantial lineup of smart beta ETFs with nine factor-based sector funds.
iShares introduced the new iShares Edge MSCI Multifactor Sector ETFs on Thursday. “The new ETFs target select companies within each U.S. stock sector and focus on financially healthy firms (quality), inexpensive stocks (value), smaller companies (size), and trending stocks (momentum),” according to a statement from New York-based BlackRock.
The iShares Edge MSCI Multifactor Energy ETF (BATS: ERGF) follows the MSCI USA Energy Diversified Multiple-Factor Capped Index and holds 22 stocks. The iShares Edge MSCI Multifactor Materials ETF (BATS: MATF) holds 26 stocks and tracks the MSCI USA Materials Diversified Multiple-Factor Capped Index.
The iShares Edge MSCI Multifactor Industrials ETF (BATS: INDF) holds 34 stocks and follows the MSCI USA Industrials Diversified Multiple-Factor Capped Index. A multiple-factor approach to consumer discretionary names, the iShares Edge MSCI Multifactor Consumer Discretionary ETF (BATS: CNDF) is home to 43 stocks.
CNDF's staples counterpart, the iShares Edge MSCI Multifactor Consumer Staples ETF (BATS: CNSF) has 29 constituents. iShares' multi-factor healthcare play, the iShares Edge MSCI Multifactor Healthcare ETF (BATS: HCRF), follows the MSCI USA Health Care Diversified Multiple-Factor Capped Index and holds 37 stocks.
The iShares Edge MSCI Multifactor Financials ETF (BATS: FNCF) houses 41 stocks while following the MSCI USA Financials Diversified Multiple-Factor Capped Index. A multi-factor idea for the technology sector is the iShares Edge MSCI Multifactor Technology ETF (BATS: TCHF).
Investors can spice up conventional approaches to the utilities sector with the 23-stock iShares Edge MSCI Multifactor Utilities ETF (BATS: UTLF). All of the new iShares multi-factor sector ETFs charge 0.35 percent per year, or $35 for every $10,000 invested.
“Smart beta ETFs have become increasingly popular strategies for investors seeking to manage risk and obtain precise exposure to historically return driving factors, and saw $31 billion in new flows globally in 2015. Minimum volatility ETFs were a major contributor in 2015 with over $11 billion of inflows, and have led the way in 2016 with a record-breaking $12.6 billion of inflows year-to-date,” according to BlackRock.
Despite the rapid growth of multi-factor ETFs, the approach is not often applied at the sector level. However, John Hancock introduced several multi-factor sector ETFs last year before launching another five in March.
Related ETF Content:
| Index | Last | Change | % Change |
|---|---|---|---|
| Dow | 32,627.97 | -234.33 | -0.71% |
| Nasdaq | 13,215.24 | 99.07 | 0.76% |
| S&P 500 | 3,913.10 | -2.36 | -0.06% |
| Treasuries | 1.73 | 0.00 | 0.12% |
| Company | Price | Change | % Change |
|---|---|---|---|
| Ford Motor Co | 8.29 | 0.05 | 0.61% |
| Advanced Micro Devic... | 54.59 | 0.70 | 1.30% |
| Cisco Systems Inc | 47.49 | -2.44 | -4.89% |
| General Electric Co | 13.00 | -0.16 | -1.22% |
| Kraft Heinz Co | 27.84 | -2.20 | -7.32% |
NMLS #1136
