Quantitative investing

Enhanced indexing

In the realm of quantitative investing, enhanced indexing stands out as a sophisticated strategy aiming to outpace traditional market benchmarks.

By taking a capitalization-weighted index as a foundation, these strategies emphasize stocks with attractive factor characteristics, employing advanced investment models. This design ensures cost efficiency while sidestepping market overcrowding and potential arbitrage. The efficiency of such strategies can be measured using the information ratio. For those seeking consistent factor premium capture, portfolios with a flexible tracking error are the ideal choice, often yielding higher expected returns.

See also

Systematic approach
Traditional versus factor allocation

Invisible layers surface to deliver attractive returns

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