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ETF Specialist

This ETF Provides Exposure to Well-Vetted Factors

Diversification is a powerful tool to control risk.

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Diversification is almost always a good idea. While it’s natural to think about diversification across securities, sectors, regions, and asset classes, it’s a good idea to diversify across factors as well. Factors are common security characteristics that can help predict and explain returns. These include value, small size, quality, and momentum. While these factors have each generated market-beating returns over the long term, they also go through long stretches of underperformance that are difficult to predict. Value’s lengthy dry spell is a great example. Investors looking to benefit from factor investing while not betting heavily on any one factor might consider iShares Edge MSCI Multifactor USA ETF (LRGF).

This fund has a good chance to beat the market over the long term. Under our new ratings framework, which places a greater focus on fees, the fund warrants an upgrade to a Morningstar Analyst Rating of Silver from Bronze.

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Venkata Sai Uppaluri does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.