Quantifiable
Factors are quantitative measures that have been statistically proven to positively impact portfolio performance over time.
Processed
Over full market cycles, factors generate alpha through consistent application of predictive processes.
Unemotional
Factors take the emotion out of investing by identifying observable and measurable characteristics of a company’s stock and financials.
Momentum
- Captures trends by investing in outperforming assets
- Companies that have performed well in recent past will continue to perform well
Value
- Finds underpriced stocks with growth potential
- Companies discounted relative to their fundamentals
Size
- Invests in smaller companies with higher growth prospects
- Smaller companies will exhibit higher growth
Quality
- Focuses on financially stable companies with strong fundamentals.
- Financially healthy companies with strong balance sheets
Capital Efficiency
- Higher Profitability and efficient use of available funding
Low Volatility
- Reduces risk by emphasizing more stable investments.
Factor Performance
Over full market cycles, investing through a factor lens has proven to drive outperformance over time
- Long-Term Investing
- Multi-Factor Investing is particularly well-suited for those with a long-term perspective, as it capitalizes on the structural tendencies of factors to outperform over extended periods while weathering short-term volatility
- Improved Risk-Adjusted Returns
- Multi-Factor strategies aim to strike the balance between risk and reward. By allocating across multiple factors, these portfolios have shown to achieve higher returns with lower volatility compared to traditional market-cap-weighted indices over full market cycles
Identify Economic Regime
Adaptability In Changing Markets
- Depending on the economic environment, some factors outperform others. For example, economic slowdowns favor factors such as quality and low volatility. In economic expansions, momentum benefits
- No single factor consistently outperforms across all market cycles. Multi-Factor Investing adapts to shifting economic conditions, ensuring your portfolio remains aligned with the factors most likely to deliver results in each environment
Multi-Factor Approach
Taking a multi-factor approach allows a smoother investment experience, and enhanced risk-adjusted returns irrespective of the state of the economic cycle
- Enhanced Diversification
- While traditional portfolios may rely on broad market indices or single-factor strategies, Multi-Factor Investing offers an additional layer of diversification. By blending factors, this strategy ensures exposure to a wide range of market drivers, reducing reliance on any single condition or trend
- Transparency
- Allows for understanding exactly how and why investments are positioned for success