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A new way to invest:
Factor ETFs

Introducing factors and smart beta

Factors – well known, well documented, well understood investment characteristics – are present in all portfolios. Factors are not new.

What is new is the way we access these investment ideas, such as through Factor exchange traded funds (ETFs). Factor ETFs capture the power of factors, delivering them in a cost-efficient structure, revolutionizing the way investors access these historically rewarded investment ideas.

A common way to access factors is through rules-based ETFs (often referred to as “Smart Beta”).

Smart beta ETFs capture the power of factors, delivering them in a cost and tax efficient structure, revolutionizing the way investors access these historically rewarded investment ideas.

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    Remember how hard it used to be to book a vacation? We used to spend hours on the phone with a travel agent, then wait days, even weeks for them to work their magic. And that magic came with a high fee because only travel agents had access to the important information needed to book our vacation.

    But the information that was once only available to travel agents is now available to anyone – within seconds. Travel sites have made finding the perfect hotel cheaper, faster and more efficient.

    The same is true for investing. For years, active managers used teams of analysts to find stocks that seemed more likely to outperform. And as an investor, you had to pay a lot in fees to access that thinking.

    Many of the traits that active managers have looked for (like buying underpriced, quality stocks) are called Factors. And just like you no longer need to call a travel agent to book an affordable, quality vacation, you no longer need to pay large fees for active managers to choose the right stocks based on Factors.

    Now, you can use iShares Factor ETFs to invest in stocks that exhibit the Factors that have historically driven portfolio returns.

    Just as travel sites use simple filters to quickly drill down to the perfect hotel, factor investing provides access to security screens that active managers have used for generations. Thanks to data and technology, the investment ideas that once took a team of analysts months to research now takes a fraction of the time, at a fraction of the cost.

    There are five Factors that have historically proven to be drivers of return, and iShares offers ETFs that seek to capture all five:

    There’s Quality, which identifies companies with strong and healthy balance sheets. Minimum Volatility, or stocks that are less volatile than the broad market. Size, which targets smaller, more nimble companies. Momentum, which seeks stocks on an upswing. And value, which targets stocks that are inexpensive relative to their fundamentals.

    Factor ETFs deliver the power of time-tested investment screens in a low-cost and tax-efficient investment vehicle, revolutionizing access for everyday investors.

    Who said finding the right securities for your portfolio was difficult? We say, it’s as easy as booking a hotel.

Explore our Factor ETFs

Factor StrategyWhat does it do?Example Products
Single Factor Targets exposure to a factor that has been a long-term driver of returns, such as momentum, quality, size and value VLUE, QUAL, MTUM, SIZEFOVL
Multifactor Seeks to provide diversified exposure to a variety of factors that have been identified as drivers of long-term performance: momentum, quality, size and value LRGF, INTF, ACWF, DYNF
Minimum Volatility Targets stocks that exhibit a lower level of volatility than their peers USMV, EFAV, EEMV
Fixed Income Targets exposure to historically rewarded factors in fixed income securities to help seek better risk-adjusted returns FIBR, IGEB, HYDB

How to use Factor ETFs

There are many ways to implement Factor ETFs. One way is as a complement to, or replacement for, traditional style box managers.

Click on a large cap style below to see how Factor ETFs have delivered better returns at lower cost.

 

VALUE
BLEND
GROWTH
LARGE CAP
LARGE CAP
MID CAP
MID CAP
SMALL CAP
SMALL CAP

VLUE has delivered better returns vs. actively managed value funds

Compare the growth of a hypothetical $10,000 investment in our VLUE ETF to an average of comparable actively managed value funds.

chart chart Past performance does not predict future returns.View standardized performance for iShares ETFs.
VLUE
ACTIVELY MANAGED VALUE FUNDS
Average of comparable actively managed large cap value mutual funds*Expense ratio: 1.01%

QUAL has delivered better returns vs. actively managed blend funds

Compare the growth of a hypothetical $10,000 investment in our QUAL ETF to an average of comparable actively managed blend funds.

chart chart Past performance does not predict future returns.View standardized performance for iShares ETFs.
QUAL
ACTIVELY MANAGED BLEND FUNDS
Average of comparable actively managed large cap blend mutual funds*Expense ratio: 1.04%

MTUM has delivered better returns vs. actively managed growth funds

Compare the growth of a hypothetical $10,000 investment in our MTUM ETF to an average of comparable actively managed growth funds.

chart chart Past performance does not predict future returns.View standardized performance for iShares ETFs.
MTUM
ACTIVELY MANAGED GROWTH FUNDS
Average of comparable actively managed large cap growth mutual funds*Expense ratio: 1.09%

What is factor rotation?

Factor rotation strategies seek outperformance through the dynamic use of factors. The BlackRock U.S. Equity Factor Rotation ETF (DYNF) allows investors to seek outperformance through the dynamic and active management of factors.

The Factor Box: A new lens
Understanding risk and drivers of performance can be difficult. The Factor Box provides a new lens, illuminating factor exposure in investments.
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