Multifactor ETFs use a combination of rule-based strategies to develop a portfolio of shares, bonds or other assets. They get their name from the idea that every investment has multiple factors (e.g. value, momentum, volatility, etc.) and can be mixed together to a make a great portfolio.
In truth, almost all rules-based ETFs are multifactor ETFs. However, you’ll know a multifactor when you see one in the wild because they often use multiple rules, filters and strategies to create one portfolio.
