The low interest rate environment and high U.S. equity valuations of recent years have created a challenging return outlook for institutional investors. One area that many investors have turned to in their pursuit of incremental returns is factor exposure management, which is often referred to as smart beta or risk premia investing. The management of factor exposures is especially interesting in multi-asset portfolios, because there are so many moving parts and so many interdependencies.
This paper discusses how to tackle factor exposures implementation and management within multi-asset portfolios in order to have the greatest likelihood of success. An example of how it may work in practice is included.
Factor exposures in multi-asset portfolios
How do you have the greatest likelihood of success in implementing and managing factor exposures in multi-asset portfolios? This paper tackles this question.
By Rob Balkema
Frank Russell Company owns the Russell Investments trademarks used in this material. See disclosures for details.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.