FactOR Fiction: Can Alternatively Weighted Indices Offer Meaningful Factor Exposure?

Market participants are increasingly aware of systemic return factors associated with specific investment approaches and styles. Many are choosing to gain exposure to factors via alternatively weighted indices.

Olly
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Managing Editor
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Reviewed by: Olly Ludwig
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Edited by: Olly Ludwig

Market participants are increasingly aware of systemic return factors associated with specific investment approaches and styles. Many are choosing to gain exposure to factors via alternatively weighted indices. Does this make sense? How much factor exposure do alternatively weighted indices offer, and how do they compare to "pure" factor indices? Ted Stover, managing director of research at FTSE Group, explores this rapidly growing phenomenon. Topics to be covered include:

  • Common misconceptions about alternatively weighted indices and factor investing
  • How to approach noncorrelated factors
  • Best practices for using alternatively weighted indices

Olly Ludwig is the former managing editor of etf.com. Previously, he was a financial advisor at Morgan Stanley Smith Barney and an editor at Bloomberg News. Before that, Ludwig was a journalist at the Reuters News Agency in New York.