The future of factor investing
Factor investing is an area I have researched and written about extensively (see here, here and here) . It is an approach to active management that is lower cost and backed by decades of historical data, compared to the standard high-cost, overdiversified stock picking approach that has failed. The future of factor investing We believe that factors will provide persistent sources of return over time. However, we acknowledge that as factors become more accessible and factor strategies are used by an expanded range of investor types, the dynamics of factor investing may change in three important ways. ‘The Future is Factor Investing’ was the theme for the inaugural Satrix conference, hosted in Cape Town and Johannesburg last week. This event focused on factor investing as a solution to optimising outcomes in an increasingly challenging investment environment. The rise of factor investing has sparked excitement as well as angst across the investment community. As these strategies have become increasingly popular, investor enthusiasm has been coupled
27 Nov 2019 Use of factor investing continues to increase around the globe. 2. 2. Existing factor investors are rebalancing their allocations between factors and
The Academic Advisory Board met in 2019 to discuss factor investing. strategies have the best possible chance of delivering excess returns in the future . Diversification is also powerful because it reduces uncertainty when forecasting the future. An investment principle when applied on a single occasion could be. If we take the analogy slightly further, "factor investing", a fast-growing technique of asset allocation, would correspond to molecular cuisine. Let's take a look. Indeed, factor-based investing is premised on the ability to identify factors that will earn a positive premium in the future. A large range of factors have been While they may not have been known by the same names, many modern investment factors have historical roots stretching back centuries. This series, The We think that a possibly greater influence in future will be the rise of commoditized factor strategies, first in long-only equities and then for cross-asset and
5 Sep 2018 So should we do things by the book, or is it all pulp fiction? In fact, do investors need a novel approach? FACT: Multi-factor strategies from
3 Sep 2019 Abstract: This study investigates whether the profitability of various factor investments is sustainable after costs due to price impact, and The economic intuition behind factor performance is analyzed, along with its implementation. Finally, likely innovations and future product strategies are briefly 19 Apr 2019 Many investors mistakenly believe they can diversify away most of the risks in factor investing by creating a portfolio of several factors. In periods much as how much money. Present and future value also discussed. is the risk free interest rate determined by economic factors? What are some things that
19 Apr 2019 Many investors mistakenly believe they can diversify away most of the risks in factor investing by creating a portfolio of several factors. In periods
20 Feb 2020 So what is the future for factor investing? Well the obvious thing that comes to mind is blending multiple factors. This can be done in many ways, they will be key drivers in the future landscape of asset management.” portfolio managers have developed a large spectrum of Smart Beta & Factor Investing.
Factors such as size, value, momentum, quality, and low volatility are at the core of. “smart” or “strategic” beta strategies, and are investment characteristics that
The Future for Factor Investing May Be Different Than its Backtested Past Data mining is a risk even with Value and Momentum strategies. Combining Value and Momentum has episodic outperformance versus Value alone. Past performance is not a guarantee of future results, especially when backtested. “The future of investing is sustainable investing. Consumers have demanded sustainability be a factor in so many industries, food, consumer products,energy, and investing is no longer the exception. Factor investing is an area I have researched and written about extensively (see here, here and here) . It is an approach to active management that is lower cost and backed by decades of historical data, compared to the standard high-cost, overdiversified stock picking approach that has failed. The future of factor investing We believe that factors will provide persistent sources of return over time. However, we acknowledge that as factors become more accessible and factor strategies are used by an expanded range of investor types, the dynamics of factor investing may change in three important ways. ‘The Future is Factor Investing’ was the theme for the inaugural Satrix conference, hosted in Cape Town and Johannesburg last week. This event focused on factor investing as a solution to optimising outcomes in an increasingly challenging investment environment. The rise of factor investing has sparked excitement as well as angst across the investment community. As these strategies have become increasingly popular, investor enthusiasm has been coupled
Factor investing: get your exposures right! This paper is devoted to the question of optimal portfolio construction for equity factor investing. The authors discuss Over the last fifty years, academic research has identified hundreds of factors that impact stock returns. Security characteristics that may be included in a factor-