Envestnet unveils strategic beta ETF ranking methodology

Jun 7th, 2017 | By | Category: ETF and Index News

Chicago-headquartered portfolio management consultants Envestnet PMC has introduced a quantitative approval process for evaluating strategic beta ETFs.

Brandon Thomas, chief investment officer of Envestnet PMC.

Brandon Thomas, chief investment officer of Envestnet PMC.

“Our new strategic beta ETF ranking methodology has been thoughtfully developed to provide advisors and home offices with a way to assess the relative merits of strategic beta ETFs,” said Janis Zvingelis, director of quantitative research at Envestnet PMC. “This framework is a valuable addition to PMC’s stable of quantitative ranking methodologies.”

The evaluation process analyzes strategic beta ETFs according to cost, liquidity, and performance. When reviewing performance, the methodology tracks a strategic beta ETF’s risk-adjusted return as well as its exposure to its respective risk factor, such as value, momentum, quality, size, or market. The firm’s quantitative research group also checks to make sure the risk factor driving an ETF’s strategy is justified by academic research.

Envestnet PMC’s list of approved strategic beta ETFs that meet its evaluation criteria is updated and offered on a quarterly basis.

“Factor-based investing—including ‘smart’ or ‘strategic’ beta—has long-standing and deep roots in academic and industry research,” said Brandon Thomas, chief investment officer of Envestnet PMC. “We are firm believers that factor-driven investing can potentially produce superior results for clients, and we are glad to offer research-based quantitative guidance for advisors and investors who are eager to reap the benefits of factor-driven investment strategies.”

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