LRGF Profile
The iShares U.S. Equity Factor ETF is designed to provide investors with exposure to a diversified portfolio of large- and mid-cap U.S. equities, while strategically targeting specific investment factors that have historically driven long-term performance. The fund seeks to replicate the performance of its underlying index, which is a subset of the STOXX USA 900 Index. This index is composed of carefully selected large- and mid-capitalization stocks, chosen and weighted through an optimization process that focuses on five key factors: momentum, quality, value, low volatility, and size.
The ETF typically invests at least 80% of its assets in the component securities of the underlying index, as well as in other investments that exhibit economic characteristics similar to those of the index's components. This focus on large- and mid-cap stocks ensures that the fund offers broad exposure to the U.S. equity market while emphasizing companies that score highly on the targeted factors. The fund's strategy is designed to capture the benefits of these factors, which include the potential for superior risk-adjusted returns over time.
Momentum refers to the tendency of stocks that have performed well in the recent past to continue performing well in the near term. Quality focuses on companies with strong profitability, stable earnings, and solid balance sheets. Value seeks out stocks that are undervalued based on fundamental metrics, such as price-to-book ratio. Low volatility aims to invest in stocks that exhibit lower price fluctuations, providing more stable returns. Lastly, size targets smaller companies within the large- and mid-cap universe that may offer higher growth potential. By balancing these factors, the fund aims to create a more resilient and potentially higher-performing portfolio.
The iShares U.S. Equity Factor ETF is ideal for investors who wish to maintain diversified equity exposure while benefiting from a systematic factor-based investment approach. The fund’s optimization process ensures that it maximizes exposure to the five target factors, while the underlying index's broad coverage of the U.S. market provides ample diversification. This ETF is particularly well-suited for those seeking to enhance their portfolio’s risk-adjusted returns through a disciplined, factor-driven strategy that leverages historical patterns in stock performance.
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