What is Factor Investing?

Looking beyond value and growth to other sources of investment returns

Fernando Luque 7 October, 2021 | 8:55AM
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Coloured pencils in a row

The concept of factor investing is a relatively recent concept. It has been closely linked to the appearance (especially in the United States) of exchange traded funds (ETFs) known as strategic beta or smart beta. Although strategic beta ETFs are passive management products, their objective is to beat the return of traditional indexes, or to reduce the risk of the indices, through the use of factors.

Although it may seem like a "new" concept, the foundations on which factor investing is based have been known for quite some time in academia.

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About Author

Fernando Luque

Fernando Luque  is Senior Financial Editor at Morningstar Spain