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BlackRock's iShares Launches Factor Rotation, Value ETFs

March 22, 2019 9:02 am
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BlackRock Inc.'s (NYSE:BLK) iShares unit, the world's largest issuer of exchange traded funds, added to its already expansive ETF lineup Thursday with two funds.

The new funds are an actively managed factor rotation strategy and a new, passive take on value investing.

What Happened

The BlackRock U.S. Equity Factor Rotation ETF (NYSE:DYNF) is the new, actively managed factor rotation fund. DYNF “seeks to outperform the investment results of the large- and mid-capitalization U.S. equity markets by providing diversified and tactical exposure to style factors via a factor rotation model,” according to iShares.

The new ETF is a multi-factor that emphasizes the minimum volatility, momentum, quality, size and value factors. DYNF's benchmark is the 80% MSCI USA Indx/20% MSCI USA Min Vol(USD) Index.

The fund is slightly overweight the technology and health care sectors, its largest sector weights, relative to benchmark. DYNF is also modestly overweight consumer discretionary and staples stocks while being underweight financials compared to the benchmark.

The new ETF charges 0.30 percent per year, or $30 on a $10,000 investment.

Why It's Important

The iShares Focused Value Factor ETF (NYSE:FOVL) is the newest value ETF from iShares. Home to 39 stocks, that new ETF targets the Focused Value Select Index.

FOVL's selection universe starts with the Russell 1000 Index. Companies from that index with unfavorable volatility traits and high debt burdens are excluded as are companies with negative earnings.

Valuation metrics employed by the new ETF include price-to-book, price-to-dividend, price-to-earnings and price-to-cash flow from operations ratios.

Typically, value ETFs feature large weights to the financial services sector and that is true of FOVL as the new ETF has an almost 39 percent weight to that group. Industrial and utilities stocks combine for over a quarter of the new fund's weight.

FOVL charges 0.25 percent per year, or $25 on a $10,000 investment.

Factor ETFs capture the power of factors, delivering them in a cost-efficient structure, revolutionizing the way investors access these historically rewarded investment ideas,” according to iShares.

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