Factor rotation strategies can help you take advantage of shifting market cycles
In a constantly changing market environment, factor investing in equities has its ups and downs. While this cyclicality may frustrate some investors, it offers forward-thinking advisers the opportunity to potentially profit from both good times and bad times.
In the next webcast, Factor rotation strategies can help you take advantage of shifting market cycles, Sean O’Hara, President, Distributors of FNB Pacer; and John Lunt, president of Lunt Capital Management, will highlight a factor-based investment strategy that alternates its tilt towards the S&P 500 investment factors as the market itself changes.
More precisely, the Pacer Lunt Large Cap Alternator ETF (ALTL) is an index ETF that aims to alternate between high beta and low volatility stocks listed in the S&P 500 Index.
The high beta index is an index made up of stocks that are most sensitive to changes in market returns.
The low volatility index is an index made up of stocks with price volatility below the overall market average.
“Low volatility and high beta factors have historically shown periods of outperformance. The Lunt Capital US Large Cap Equity Rotation Index is innovative because it uses a rules-based strategy to alternate between High Beta and Low Volatility factors, ”according to Pacer ETFs.
In addition, the Pacer Lunt Large Cap Multifactor Alternator ETF (PALC) is a passively managed fund that alternates between value, quality, volatility and momentum stocks within the S&P 500 Index.
A factor is an attribute that can help explain the long-term risks and rewards of an asset. The factors can be divided into high and low factors. Momentum describes the tendency for top performing stocks to continue to perform well for the foreseeable future. Quality covers the characteristics that contribute to a company’s sustainable business model and sustainable competitive advantage. Value is a measure of the market value of a stock relative to its intrinsic value. Finally, volatility is the measure of the variance of the returns of a security or index.
Financial advisors interested in learning more about the factor rotation strategy can register for the Tuesday, June 22 webcast here.