Our next generation low-volatility ETF aims to narrow the universe of investable companies using multiple factors in an effort to deliver a smoother ride.
Market turbulence can be unsettling. So it’s no surprise investors have gravitated to a single investment factor— low-volatility—as a means to select stocks. Is there a better way? Let’s explore a multi-factor* approach that systematically narrows the universe of stocks to more durable companies, in our view, and then assembles them in a low-volatility portfolio.
Evolution, not revolution
To improve on early iterations of popular low-volatility strategies, VictoryShares US Multi-Factor Minimum Volatility ETF (VSMV) tracks an index that employs a two-step approach that aims to deliver superior risk-adjusted equity returns, while potentially minimizing the overall expected volatility of the portfolio.
Uses multiple factors (academically accepted characteristics) to screen the universe of domestic large- and mid-cap stocks. This narrows the pool of portfolio candidates to those ranked highest based on an optimal blend of factors. Our fundamental screening process looks at multiple characteristics, including: momentum, quality, value, and growth. Each company is scored relative to its peers, and only the top 20% are eligible for inclusion.
Optimizes the portfolio to ensure diversification and help reduce overall volatility. This process minimizes the correlation of assets while simultaneously diversifying the portfolio by size, sector and style.
VSMV doesn’t just buy low-volatility stocks, it seeks to build a low-volatility portfolio. What differentiates VSMV?
• VSMV first narrows the investible universe using a multi-factor screening process to help identify stocks most likely to outperform.
• After selecting what we believe are more durable companies, the portfolio is constructed in a way that aims to reduce risk and volatility.
• First generation low-volatility approaches can be concentrated by sector or style. Other strategies optimize their portfolios but do not screen for academically accepted factors like quality, valuation, growth or momentum.
Who should consider VSMV?
• Investors interested in a next-generation approach to low-volatility investing, rather than allocating to a basket of low-volatility stocks.
• Investors seeking equity exposure with potential downside protection.
• Investors looking to replace or supplement existing risk-managed strategies with a low-cost, tax-efficient ETF solution.
• Investors searching for a core portfolio replacement that offers low-cost exposure to large- and mid-cap domestic stocks.
Want to learn more? Please contact your financial advisor or visit www.victoryshares.com. Download a PDF Version
* Multi-factor strategies combine several academically accepted characteristics— such as momentum, quality, value and growth, among others—in an investment strategy in an effort to achieve more consistent performance over time.
An investor should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information about the Fund can be found in the Fund’s prospectus, or, if applicable, the summary prospectus. To obtain a copy, please click here, call your Financial Advisor, or call shareholder services at 866.376.7890. Read the prospectus carefully before investing.
Investing involves risk, including the potential loss of principal. The value of the equity securities in which the Fund invests may decline in response to developments affecting individual companies and/or general economic conditions.
You may lose money by investing in the Fund. There is no guarantee that the Fund will achieve its objective. The Fund has the same risks as the underlying securities traded on the exchange throughout the day.
Indexes are unmanaged and it is not possible to invest directly in an index.
VictoryShares ETFs are distributed by Foreside Fund Services, LLC. Victory Capital Management Inc. is the adviser to the VictoryShares ETFs. Victory Capital is not affiliated with Foreside Fund Services, LLC.
NOT A DEPOSIT • NOT FDIC OR NCUA INSURED • MAY LOSE VALUE • NO BANK OR CREDIT UNION GUARANTEE
©2017 Victory Capital Management