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Factor-based ETFs have flourished in recent years, supported by numerous academic studies showing that certain stock attributes—or factors—can be exploited in pursuit of better risk-adjusted returns than traditional equity benchmarks. Some of these funds track single factors, such as momentum, low volatility, quality, and value, while others combine multiple factors. While each of these approaches offers distinct benefits and drawbacks, we believe another intriguing strategy, which utilizes relative strength to rotate between multiple factors, including the "opposite" sides of traditional factors, is worth consideration.
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