Tracking the Solactive Tradable European Factor indices – which are derived from a universe of 675 stocks – investors can choose between value, quality, low beta, price momentum and earnings momentum.
According to Invesco Powershares, each index, which is rebalanced monthly, is created by the selecting 50 stocks with the greatest exposure to each respective factor.
The five ETFs are named as:
- PowerShares Tradable European Value Factor UCITS ETF
- PowerShares Tradable European Quality Factor UCITS ETF
- PowerShares Tradable European Low Beta Factor UCITS ETF
- PowerShares Tradable European Price Momentum Factor UCITS ETF
- PowerShares Tradable European Earnings Momentum Factor UCITS ETF
Each ETF has an ongoing charge of 0.3% per year and is available in euros on Xetra.
“Factors are nothing new,” said Chris Mellor, equity product specialist at Invesco Powershares. “Academics have been researching them for decades to explain stock performance. What’s become evident more recently is the way investors are using them to enhance performance or hedge risk in their portfolios.
“Each of these factors has outperformed the broad equity market over the longer term but individual performance can vary significantly in the short term. This provides investors with an opportunity to capture additional performance if they are able to adjust exposure at the appropriate times.
“We expect these new ETFs to attract a variety of investors who want to pursue factors from either a tactical or a strategic perspective. For example, hedge funds are likely to use them in the same way as our sector ETFs, providing them with an easy way to capture or adjust exposure to a specific part of the market for hedging purposes.”
