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Factor-tilt approach

A method of implementation where part of a portfolio is invested specifically in factor strategies.

Specific factors that may be under-represented in the 'standard' asset allocation are added in this approach using dedicated factor strategies.

Figure: Factor Tilts
Source: Koedijk, Slager, Stork: 'Factor Investing in Practice: A Trustees' Guide to Implementation' (2014).

Different approaches to implementing factor investing can be distinguished, such as the risk due diligence approach and factor optimization.

Quantitative investing: invisible layers surface to deliver attractive returns
Quantitative investing: invisible layers surface to deliver attractive returns
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Achieving your investment goals with factors: get specific factor exposure
Achieving your investment goals with factors: get specific factor exposure
Factor-based strategies can help investors get exposure to a particular factor.
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Achieving your investment goals with factors: reduce costs
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Factor-based strategies can help investors reduce management costs.
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Achieving your investment goals with factors: enhance returns
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