Factor Investing
Factor Investing
Definition
What is Factor Investing?
An approach targeting broad, persistent return drivers such as value, size, momentumThe tendency of assets with strong recent performance to continue outperforming for a period., quality, or low volatilityThe degree and frequency of price or return fluctuations..
Example in practice
How This Looks in Practice
A multifactor fund combines cheap, profitable, and trending shares.
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Related Terms
Factor Investing
Value Factor
The tendency for relatively cheap securities to perform differently from expensive securities over time.
Factor InvestingSize Factor
The return pattern associated with smaller companies relative to larger companies.
Factor InvestingMomentum Factor
The tendency for recent relative winners and losers to continue their trends for a period.
Regulation & ComplianceFiduciary Duty
A legal or ethical duty to act loyally and carefully in another person's best interest.