Germany-based asset manager Star Capital has launched the STARS Multi-Factor Fund, which aims to use factor ETFs in order to respond to changing market and economic cycles with an active factor rotation.
According to Star Capital, the new strategy is based on the results of more than 20,000 test series, which first measured whether and over which time period a factor-based index could show a positive trend.
The investment universe includes about 100 smart beta ETFs, which provide global and regional exposure to equities with various factors, including dividends, buybacks, value, growth, quality, size, minimum volatility and momentum.
“Factor premiums can generate outperformance against the broader stock market in the long term, but the challenge lies in allocating the right factors at the right time in order to exploit the sources of return efficiently,” says fund manager Markus Kaiser, who launched the first ETF-based fund of funds in Germany in 2007.
“Active rules-based risk management allows for a significant reduction in the maximum drawdown of the equity investment and the stability of the portfolio’s return is improved significantly,” Kaiser explains.
The fund is authorized for distribution in Germany and Luxembourg and open to investors who commit a minimum amount of €100,000.