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Lifting the lid on factor investing

Lifting the lid on factor investing

19-01-2017 | Insight

Factor investing is becoming mainstream, but not everyone agrees on how it is defined, or what factors should be used. A recent round table by Pensions Age magazine brought together leading proponents in the field, including Joop Huij, head of factor investing research at Robeco.

The view at Robeco, which was one of the early pioneers of factor investing in the 1990s as part of the development of quantitative investing, has been that up to four factors can be used. These are low-volatility, momentum, value and quality. But not everyone agrees with this, and some still confuse factor investing with ‘smart beta’ investing or enhanced indexing. And where does sustainability investing, which by definition uses specific criteria during the investment process, fit into the mix? The differing views of the seven panel participants ranging from pension fund trustees to portfolio managers and investment directors makes interesting reading. Download the Pensions Age report of the event here.

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