Now more than ever, it's critical to have a thoughtful approach to managing risk. But how? Russell Factor ETFs represent a new way to manage exposure to stocks with specific style factor characteristics–such as volatility, beta, or momentum. They allow you to increase or decrease your exposure and potentially enhance returns across large cap, small cap and international equities.
In addition, Russell Factor ETFs are grounded in experience and long-standing strategic thinking based on Russell's more than 75 years of insight into institutional investment practices. Our ETFs track the Russell-Axioma Factor Indexes–a series of indexes that bring together Russell's expertise in index construction and investment management with advanced risk modeling and portfolio construction capabilities from Axioma, a premier provider of risk analytics.
What is a factor?
Factors include any common market-wide drivers of security returns. A few familiar factors include fundamental-based drivers of risk and return such as size, growth and value. Other factors include market-based influences on risk and return. These include:
Russell Factor ETFs give all investors access to risk management strategies that had previously been available only to the largest, most sophisticated asset managers.
How to use Factor ETFs
Russell Factor ETFs have multiple applications for investors seeking either to target specific factor exposures, manage risk or potentially improve the diversification of their portfolios.
Adjust equity market sensitivity in a single trade
Whether you're looking to increase or decrease the beta of your portfolio based on your unique risk/return profile, Russell High and Low Beta ETFs give you the flexibility to directly manage equity market sensitivity in a single trade.
Help manage volatility while staying invested
Russell Low Volatility ETFs provide a new way to target potentially smoother equity performance while staying invested in the equity markets. Russell High Volatility ETFs can be used to implement a tactical exposure to potential upside from stocks with high volatility or they can be paired with their low volatility counterparts to help manage a portfolio's total volatility.
Target stocks that have historically outperformed the market environment
Russell High Momentum ETFs offer efficient, cost-effective access to a portfolio of stocks with the highest medium-term total returns. These types of stocks may increase diversification, particularly relative to value-oriented portfolios, and enhance long-term risk-adjusted returns.
A balance of three critical criteria
An effective factor index must consider three critical but often competing characteristics, as it's not always possible to achieve all three simultaneously. Russell Factor ETFs are designed to track indexes that seek to balance the tradeoffs among the following three index characteristics:
True factor returns
Designed to deliver returns that closely match those of a simple factor portfolio that invests in the subset of the Russell 1000® or Russell 2000® Index constituents with the highest exposure to the targeted risk factor.
Designed to consider turnover and transaction size during the monthly reconstitution of each index. (Turnover may be heightened during periods of increased market volatility.)
Constructed to deliver focused exposure to the targeted risk factor while minimizing exposure to other factors.
Download our Product List
Russell Factor ETFs Product List › (PDF)
Download our Product Guide
Russell Factor ETFs Product Guide › (PDF)
Funds that emphasize exposure to high beta, high volatility or high momentum stocks are seen as having a higher risk profile than the overall market. However, a portfolio comprised of high beta or high volatility stocks may not produce investment exposure that is more sensitive or has higher variability to changes in such stocks' price levels. Positive momentum stocks may experience periods of relative underperformance and may not produce investment experience consistent with prior performance. Funds that emphasize exposure to low beta or low volatility stocks are seen as having a lower risk profile than the overall market. However, a portfolio comprised of low beta or low volatility stocks may not produce investment exposure that is less sensitive or has lower variability to a change in price level.
The Russell Factor ETFs are new and have limited operating history. There is no assurance the investment process will consistently lead to successful investing. There is no assurance the stated objectives will be met.
Index Risk. The Index, and therefore the Fund, may not exhibit the expected return pattern due to unpredictable factor correlations, changes in an Index component's factor characteristics between Index reconstitutions or tracking error between the Index and the target portfolio.
Russell ETFs and their corresponding Indexes are new and have limited operating history. These ETFs are passively managed and may not match or achieve a high degree of correlation with the return of their corresponding Index. New indexes are also subject to errors in construction which may result in unintended exposures.
ALPS Distributors, Inc., Russell Investment Management Company ("RIMCo", dba Russell Investments), and AXIOMA are separate and unaffiliated.
The fund is passively managed and may not match or achieve a high degree of correlation with the return of the Index. As with all investments, there are certain risks of investing in an ETF, and you could lose money on an investment in an ETF.
Shares of Russell ETFs are not individually redeemable and trade at market price (not NAV). Shares may be acquired and redeemed in Creation Units only, typically consisting of aggregations of 100,000 shares. Investors may purchase or sell ETF shares throughout the day on an exchange through a securities brokerage account.