Factors Investing

Factors investing involves selecting assets based on specific characteristics, or "factors," that are believed to drive higher returns over time. Common factors include value (buying undervalued assets), size (favoring smaller companies), momentum (investing in stocks that have recently performed well), and quality (focusing on companies with strong fundamentals). By targeting these factors, investors aim to enhance their portfolio's returns and manage risk more effectively. Essentially, factors investing is a systematic approach to building a diverse investment strategy based on empirical research rather than relying solely on individual stock selection or market predictions.