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.