Factor-Based Investing: The UK ETFs for Value and Size
Decades of academic research say value, size, momentum and profitability beat the market. The UK ETFs that capture each one, and whether the premium survives a 0.35% fee.
UK factor ETFs by tilt
| Factor | ETF | Ticker | TER |
|---|---|---|---|
| Value | iShares MSCI UK Value | IUKV | 0.35% |
| Size | Vanguard FTSE All-World Small Cap | VSSC | 0.29% |
| Momentum | HSBC MSCI World Momentum | HSMW | 0.30% |
| Profitability | Invesco S&P 500 High Profit Low Capex | SPHL | 0.20% |
Each ETF captures one academic premium. TERs verified against provider factsheets.
Key takeaways
Factor-based investing focuses on specific stock characteristics like value, size, momentum, and profitability for better long-term returns.
UK investors can use low-cost funds and ETFs to implement factor-based strategies, offering a middle ground between passive and active investing.
Each factor, such as value, size, momentum, and profitability, has academic research supporting its potential to generate higher returns.
UK investors can access factor-based ETFs like iShares MSCI UK Value UCITS ETF for value tilts, Vanguard FTSE All-World Small Cap UCITS ETF for size tilts, and HSBC MSCI World Momentum UCITS ETF for momentum tilts.