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Making Sense of the Multitude of Multifactor ETFs

Investors should do their homework to fully understand mixed and integrated multifactor ETFs.

This analyst blog is part of our coverage of the 2018 Morningstar Investment Conference. 

Multifactor investments have proliferated in recent years. As of April 30, Morningstar tagged 440 index mutual funds and exchange-traded funds with the multifactor strategic beta attribute, most of which launched during the past five years. These investments can be grouped into two buckets: mixed and integrated multifactor ETFs. Mixed multifactor ETFs divide their portfolios into individual sleeves that each target a single factor (for example, value, momentum, size, quality, or low volatility).