Harnessing the power of factors
In our pockets, we now hold the ability to summon a car, monitor our health, and make a restaurant reservation. Advances in data and technology are driving innovation, bringing scale to reduce cost, and transforming our lives.
But, how is this relevant to our investments?
We’ve learned from painful experiences that traditional ways of investing might not have truly protected us. And it’s hard to select investments.
We need a new way. Factor investing can help.
Powered by data and technology, coupled with fundamental investment ideas, that new way of investing may be here. But what are factors?
As long as there have been markets, investors have bought cheap, trending, high quality, small, and lower risk stocks. These simple strategies are what we now call factor investing.
Factors are to securities what nutrients are to food. For example, just as milk contains fats and protein that contribute to its nutritional value, a stock might have value and momentum attributes that drive its returns.
And just as people have different nutritional needs, investors may need different factor exposures. Nutrients power you; factors power your portfolio.
Factors aren’t new. They have been around for decades and are grounded in rigorous, Nobel-prize winning research, but were primarily available through actively managed mutual funds.
The innovation is not the investment ideas themselves. It’s in the way we access those investment ideas.
Smart Beta Exchange Traded Funds capture the power of factors and deliver it in cost and tax efficient ETFs, revolutionizing the way investors access these rewarded investment ideas.
Smart Beta is here to stay. Smart Beta. A new way.