Factor exposures can help drive return and manage risk
Opportunity is in the details. Factors exposure management—also known as smart beta—is detail oriented. Factors are specific, single attributes of investable securities, such as the security’s size, quality, or valuation. And their management may provide investors with supplemental return sources in a cost-effective manner, while also potentially reducing risk. In our low-return environment, this expertise can be more important than ever.
As far back as the 1980s, our investment professionals were key in defining style factors, including pioneering Growth and Value—and more recently, in defining Defensive and Dynamic style factors in the 21st century.
In multi-asset portfolios, factor exposure expertise can help manage risk and incrementally increase returns.