Fidelity: Approaches To Factor Investing

October 04, 2017

Investors may be able to build or enhance their portfolios by investing in certain factors such as size, value, momentum, quality, low volatility and dividend yield. Academic research and historical performance figures illustrate that such factors may improve returns, reduce risk or help investors achieve certain investment outcomes.

But how can you implement factor-based investment strategies into your portfolios? This article outlines three approaches to factor investing: strategic exposure, which may capture factors’ long-term benefits; cyclical exposure, which views factor exposure in relation to the business cycle; and overall portfolio construction, which focuses on using factors to help fine-tune risk exposures. Read the full article to understand the many ways that factors—used alone or in combination—may help clients reach their financial goals.

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