On Friday, Intech closed out the week by launching two new exchange-traded funds. These new funds both look to offer long-term capital appreciation.
Intech’s first fund for today, the Intech S&P Small-Mid Cap Diversified Alpha ETF (SMDX), looks to invest in both small- and midcap equities. SMDX intends to do so by primarily focusing its investments in companies within the S&P 1000 Index. The fund has a net expense ratio of 35 basis points.
Meanwhile, the Intech S&P Large Cap Diversified Alpha ETF (LGDX) focuses on large-cap companies. As such, the fund prioritizes companies within the S&P 500 Index. This large-cap strategy operates with a net expense ratio of 0.25%.
Advantages of Diversification
Each of the new Intech funds are built to provide results intended to outperform their respective indices. To do so, Intech utilizes an investment strategy that prioritizes portfolio diversification.
This strategy begins by examining the individual companies in the index to ascertain a better understanding of volatility and correlation. By doing so, Intech looks to build a selection of assets that have more diversified sources of risk and return.
Intech intends to rebalance these portfolios frequently, oftentimes opting to do so on a weekly basis. This can help both funds stay more aligned with its goal of diversification.
Both SMDX and LGDX may at times opt to pivot to securities that are outside of their chosen indexes. This can be done for a variety of reasons, including liquidity and risk management, or bolstering diversification.
For many investors and advisors, the relative uncertainty of the U.S. economy is raising concerns about market volatility. As such, the diversified strategies of SMDX and LGDX may prove to be a boon in turbulent times. By seeking diversified routes to value, these funds may be exposed to less volatility risk than more traditional indexed ETFs.
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