Macro factor investing

See how factors have performed through economic cycles, market shocks and other time periods. Featured tool. Please contact your BlackRock representative for more information. Login Newsletters. Enhanced strategies use factors in more advanced ways — trading across multiple asset classes, sometimes investing both long and short.

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Which factors are in asset classes?

Over the last fifty years, academic research has identified hundreds of factors [ citation needed ] that impact stock returns. Security characteristics that may be included in a factor-based approach includes size, value , momentum , asset growth, profitability, leverage, term and carry. A factor-based investment strategy involves tilting equity portfolios towards and away from specific factors in an attempt to generate long-term investment returns in excess of benchmarks. The approach is quantitative and based on observable data, such as stock prices and financial information, rather than on opinion or speculation. The earliest theory of factor investing originated with a research paper by Stephen A. Ross in on Arbitrage Pricing Theory , which argued that security returns are best explained by multiple factors.

Bogle: Don’t Try to Time Factor Investing

Featured tool. Excludes fund of funds. The strategies discussed are strictly for illustrative and educational purposes cactor are not investinb recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Market insights. Understand how factors work to better capture their potential for excess return and reduced risk, just as leading investors have done for decades. Hogan is the Head of Investments which manages factor based risk parity A stock exchange-traded fund ETF is a macro factor investing that tracks a particular set of equities or index but trades like a investiing on an exchange. Economic rationale : Rising interest rates decrease the present value of future cash flows, notably the market value of nominal bonds. Measured by : Surprise in default rates Investment exposure : Corporate bonds, high-yield bonds Emerging markets The reward for taking on political and sovereign risks Key fundamental question : What is the current geopolitical climate in emerging markets? You can also tap into BlackRock’s deep experience with investment macr via insights provided by our factor experts such as Andrew Ang and Sara Shores and online resources and tools designed for investors seeking access to factor investing opportunities. Measured by : Surprise in real interest rates Investment exposure : Global inflation-linked bonds.