STRATEGIES

Style advantage

Philosophy

Style Advantage is a multi-asset, long/short style factor strategy designed to provide liquid and diversified absolute returns - with low correlation to major markets.

Style Advantage aims to provide hedge fund-type exposures at lower fees.

To pursue this objective, the Factor-based Strategies investment team focuses on:

  • Harnessing style factors targeting broad, persistent returns
  • Providing low correlation to equity markets and rising interest rates
  • Delivering more cost-efficiency, liquidity and transparency compared to hedge funds

Style Advantage seeks to/is designed to deliver exposure to four economically intuitive, rewarded factors across four asset classes (fixed income, equities, currencies and commodities).

Four Economically Intuitive

Style factors capture well-known and persistent drivers of return resulting from structural, behavioral, or risk premia differences within and across asset classes. These economic rationales in style factors driving historical returns have been grounded in academic research.

Investment process

The investment process pursues diversified returns by drawing upon on a deep understanding of the various style factors. Portfolio construction avoids over-dependence on any one source of return or over-reliance on skill in forecasting market conditions.

The process has four distinct stages:

Style advantage 4 distinct stages

Applications and potential benefits

Style Advantage may appeal to investors looking for the following:

  • Exposures to style factors
  • Market neutral diversification
  • Cost efficient implementation
  • Complement to macro factor or risk parity strategies

 


Leadership

Ked Hogan, PhD
Head of Investments for BlackRock’s Factor-Based Strategies Group
Philip Hodges, PhD
Head of Research for BlackRock’s Factor-Based Strategies Group