A risk-on start to 2023 and fears of overconcentration have been followed by a more cautious tone so far in H2, however, factor ETFs can play a “crucial role” in providing defensive and diversification benefits to portfolios in either scenario, Abhishek Gupta, senior quantitative strategist at Northern Trust Asset Management, said at ETF Stream’s recent breakfast workshop.
With just seven stocks comprising all the gains made by the S&P 500 in the first half of the year, investors have been rushing to exposures allowing them to downsize their large-cap US tech bias. Unfortunately, this environment has also proved challenging for factor exposures including dividend and low volatility.
This article first appeared in ETF Insider, ETF Stream's monthly ETF magazine for professional investors in Europe. To read the full article, click here.