Factors are long run drivers of portfolio risk and returns. Having strategic allocations to factors may increase a portfolio’s expected return.

Seven mega-cap US-based companies – Apple, Microsoft, Amazon, Google, Nvidia, Tesla, and Meta (Facebook) – have stayed top of mind for many investors this year.

Factor investing can help drill through broad sector labels to help investors better understand past performance and expected returns.

Factor investing has seen increased popularity in the US. Investors may also want to consider increasing their opportunity set by considering factors abroad.

Fear of missing out, or “FOMO,” seems to be a common trend with investors. Whether it was GameStop, AMC, Bitcoin, or the FAANGs, the last few years has seen some investors exhibit FOMO as they chase the hottest trends in the market.

Yesterday’s alpha has been unbundled into market capitalization index, factors and alpha-seeking investments. What does this mean for investors? Is active dead? Of course not! But factors can enhance traditional portfolios by considering a third dimension of return.

Wondering how style factors work and how to use them? The five Ws tell the story of the value, momentum, quality, size and minimum volatility factors.

Here’s what investors consider when deciding whether to invest in long-only or long-short factor strategies, including relative and absolute return goals.

In my many conversations with investors and industry peers about factor investing, one topic seems to always come up: factor investing timing. I’ve had recent discussions on this topic with a central bank whose managers need to think about preserving capital and with a more nimble RIA team which explicitly wants to use timing to pursue incremental returns.