2024-02-12 20:29:27 ET
Summary
- DYNF is an actively managed ETF that rotates between style factors to maximize returns and outpace U.S. large- and mid-caps.
- At this juncture, DYNF is heavy in high-quality mega-caps with robust growth characteristics. Most holdings are momentum stocks; low-beta names are underrepresented.
- Even though I am impressed by its massive alpha delivered since the previous article, I remain neutral on DYNF's active factor-rotation strategy as its history of outperformance is too short.
- Nevertheless, I acknowledge that DYNF is one of the strongest factor-rotation ETFs, so it is worth shortlisting that name.
When it comes to making buy-and-sell decisions informed by style factors, investors have roughly two strategic options. The first one is for fervid supporters of a certain style. It is to stick with their factor of choice both during the ups and downs, regardless of how painful their portfolios' decline might be. Certainly, it requires a lot of patience. A perfect example of what could happen in that case is the consistent underperformance of tech-light and value-heavy portfolios during the 2010s. Or the 2021 moment for maximalist growth, innovation, and disruption equity portfolios, when they, for the most part, fell out of favor with investors abruptly, with a meaningful share of them remaining underwater until the broad growth style recovery of 2023....
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For further details see:
DYNF: Outperforming Factor Rotation Strategy Still Has Vulnerabilities