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What is multi-factor investing?
Multi-factor investing is a strategy that screens stocks for five key long-term drivers of stock performance, or ‘factors’ – quality, value, momentum, low volatility and size. Using the power of indexing, we can construct an optimised portfolio with diversified exposure to each factor.
iShares ETFs cover a broad range of asset classes, risk profiles and investment outcomes. To understand the appropriateness of this fund for your investment objective, please visit our product webpage.
Find out more about iShares World Equity Factor ETF (WDMF)
https://www.blackrock.com/au/products/284665/
This product is likely to be appropriate for a consumer:
• who is seeking capital growth
• using the product for a major allocation of their portfolio or less
• with a minimum investment timeframe of 5 years, and
• with a medium to high risk/return profile
Find out more about iShares Edge MSCI Australia Multifactor ETF
https://www.blackrock.com/au/products/284664/
This product is likely to be appropriate for a consumer:
• who is seeking capital growth
• using the product for a core component of their portfolio or less
• with a minimum investment timeframe of 5 years, and
• with a medium to high risk/return profile
Key take-aways
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01
Multi-factor investing targets stocks that possess key characteristics, or ‘factors’, that have historically driven equity market returns
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02
Multi-factor strategies can be used to potentially enhance long-term returns in investors’ core equity holdings
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03
Using multiple factors in a portfolio helps to reduce the impact of short-term underperformance from each factor
Why multi-factor investing?
Multi-factor investing focuses on each of the factors that have historically driven outperformance – value, quality, momentum, size and minimum volatility.1 Each of these factors are supported by decades of economic theory, including six Nobel prizes.2
Each of the five factors tends to perform well in different market conditions. Using a multi-factor approach can help to balance out the highs and lows of individual factors.
Where factors tend to outperform in the economic cycle
Source: BlackRock, for illustrative purposes only.
iSHARES MULTI-FACTOR ETFs
Using multi-factor in portfolios
Because a multi-factor strategy can perform across different market conditions, investors may use it to reduce risk and improve returns over time.
That's why multi-factor strategies can be useful for investors looking for more stability and better returns over time. By combining different factors, these strategies can help soften the impact of market downturns and improve chances of better performance.
Example of how a multi-factor strategy (represented by the STOXX Developed World Equity Factor Index) can improve returns compared to a broad developed market equity index over time:
Source: STOXX data as of 30 June 2025. Net returns in AUD. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
