A quick peak into the future (while I wait for my boss to approve some trades and then I dash to the gym).
If you are interested in factor investing, you probably know that beauty is in the eye of the beholder. What I mean is that calling something Value is easy, define it not quite so. Would you rank stocks by P/E, P/B, P/S? Would you blend those metrics? Would you adjust for intangibles? The possible combinations or iterations are large.
If you decide to go for an ETF, usually is not that transparent what the ETF provider does. Here some momentum ETFs (courtesy of Corey Hoffstein): different momentum measures, different weighting rules, different constrains, different rebalancing schedules. Performance spread is almost 20%.
Other than size, momentum should be on of the easier factor to define.
One day, apparently sooner rather than later, you will be able to create your own Index. Have a look at Composer.
This tool goes beyond factors; you can create your own ESG Index, or your own Cannabis Index or…well, you understood, your creativity is the only limit. Maybe one day I will create my own Index and you will be able to follow it like those scams on eToro (do not hold your breath).
Obviously this will only work if the linked broker is commission free and ideally let you buy fractional shares, otherwise you will need big capital to make it work properly. Future looks bright 😉
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