According to BlackRock, its “Enhanced ETFs” were designed in partnership with registered investment advisors (RIAs) and institutional investors, specifically public pensions, to provide a broader range of solutions to help manage equity exposures and risk.
Factors are a set of investment characteristics that explain the risk and return behavior of an asset or stock. Factor investing offers an alternative approach to traditional market-capitalization investing by aiming to cut market volatility.
The other three funds launched are the iShares MSCI USA Momentum Factor ETF (MTUM), iShares MSCI USA Size Factor ETF (SIZE) and the iShares MSCI USA Value Factor ETF (VLUE). The iShares MSCI Factor ETFs were designed at the request of institutional investors, such as Arizona State Retirement System (ASRS), who want exposure to a specific individual factor—value, size or momentum—so they can overweight or hedge a single factor that has historically explained a significant part of companies’ return and risk over the long-term.