Factors Influencing Smart Beta ETFs

Index Development plays a very important role in the investment market. There are diverse types of indices that ought to be calculated. One of the most common indices are the Artificial Intelligence Indices. Here we are going to restrict ourselves to the factors that affect the smart beta indices. There is a plethora of factors that have been observed to influence Smart Beta Indices over a period of time. These factors can be divided into equity factors and others. Here are the factors influencing Smart Beta ETFs.

Equity factors
There are a lot of factors that are known to affect the Smart Beta ETFs. To highlight a few are as following. Value and Small size are one of the major factors in Smart Beta ETFs. Other than these, low volatility, high (dividend) yield, quality, momentum and equal weight are also the important factors. Not to forget high beta, low beta, buyback and growth are some of the other factors. These are all basically the equity factors.

Other factors
Other than the above mentioned equity factors known to be there in the Smart Beta ETFs, there are other well-known factors that are quite unique to the fixed-income markets. One of the factors is Term, basically the bonds having longer maturities earn higher returns in comparison to the bonds having shorter maturities. Another factor is Credit, bonds that come with the lower credit quality ideally end up earning the higher returns in comparison to the bonds that have the higher credit quality. These factors are used by the Index providers in order to construct the factor indexes, which then act as the basis for the Smart Beta ETFs.

All in all, these are the factors influencing Smart Beta ETFs that you must be aware about in general.

Comments

Post a Comment

Popular posts from this blog

Meaning and Role of Calculation Agent

Index Services play a very important role for those indulged in making investments in the market. Without Index Calculation it is hard to determine if making investment is worth of knot. To calculate Dividend Indices there is a calculation agent. Here we are going to discuss about the meaning and role of calculation agent. Meaning of Calculation Agent It is not that easy to understand the term calculation agent, the role and duties that are associated with the same. The term calculation agent refers to an individual or says an entity who is responsible to determine the value of the derivative. It is the duty of the calculation agent to calculate the value of the derivative or in other words the amount that each party owes. He also has the power to establish structured product price thereby acting as the guarantor as well as the issuer. In case the counterparty in this derivative transaction also acts as the broker-dealer, then they also get to behave like a calculation agent.
Read more

Basic Know How About the Equity Index

Index services have played a prominent role since time immemorial. Be it the custom or the equity index you have also got the right information. As far as index calculations concerned the index provides give you an investment here also. Equity Index is simply a measurement of the section of the stock market. It is simply calculated by keeping in mind the prices of the selected stocks which is basically a tool that is employed by the investors as well as the financial managers so as to describe the market. Not only this, but it is also used to compare the return on the particular type of an investment. Here we will discuss the basic know how about the equity index. Criteria of Index The two major criteria of an index are the fact that these are investable as well as transparent. Firstly, you ought to keep in mind the fact that the method you employ for its construction need to be clear. There are many mutual as well as exchange-traded funds that attempt to "track" t
Read more

Perks of Opting for Thematic Investing

People who are fond of and are most of the times indulged in making investments re aware about the importance of Index Maintenance . Blockchain Index has grabbed the attention of many in recent times. Mostly, people these days get attracted towards thematic investing; therefore we are going to discuss the Perks Of Opting For Thematic Investing here. Theme based investment Thematic investments do not share any common traits with either generic portfolios or the mutual funds as the latter two are over-diversified. On the contrary, thematic investments basically refer to the investments that are diversified in a narrow array of stocks suitable to the theme’s investment logic. These are known to even outperform the equity benchmark returns. One of the good things about such investments are that these are relatively independent and are not affected by the economic cycles. The underlying structural trends help the investors to benefit a lot in the long run in addition to this the in
Read more