…is an index that has been designed to achieve a specific outcome.
Smart Beta refers to a methodology of index construction that seeks to achieve better risk-adjusted returns compared to traditional market capitalization weighted benchmark indexes. There is no guarantee that any strategy will achieve its objective. Franklin Templeton's ETFs are not riskless investments, and investors can lose money. For additional risk disclosures, please see the prospectus.
Smart Beta...
…is an evolved way of creating an index, using rules to target companies that demonstrate specific “factors”, or drivers of performance, in order to achieve a specific objective.
…targets a variety of factors, combining them in a strategic way, which may lead to stronger returns with less risk over time.
Understanding the LibertyQ Factor Methodology
Chandra Seethamraju, Ph.D., Vice President, Director of Systematic Modeling, Franklin Templeton Solutions, discusses the methodology behind Franklin’s multi-factor smart beta ETFs, including the rationale behind LibertyQ’s custom factor definitions and their factor weightings.
Smart beta refers to a methodology of index construction that seeks to achieve better risk-adjusted returns compared to traditional market capitalization weighted benchmark indexes. There is no guarantee that any strategy will achieve its objective. Franklin Templeton's ETFs are not riskless investments, and investors can lose money. For additional risk disclosures, please see the prospectus.
LibertyQ’s Custom Factor Definitions
While many smart beta strategies utilize the same four factors, many employ standard, widely accepted approaches to measuring these factor exposures. We sought to develop custom factor measures which we believe could provide a more comprehensive evaluation of a stock's exposure to each factor.
What factors do our Smart Beta ETFs utilize?
Our research led us to utilize four well-known factors in our smart beta ETFs: quality, value, momentum, and low volatility.
How are our ETFs different from other Smart Beta ETFs?
LibertyQ's methodology is differentiated by how we define factors.
What are our Smart Beta ETFs designed to achieve?
The results of our smart beta research have lead us to believe that our robust factor definitions may help improve risk adjusted returns over the long-term.
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