Factor Commentary

Why Factors Now?

01 feb 2016

Factor investing is more relevant today than ever, largely due to three trends.

Suppose an investor owns a number of stocks and bonds, which he looks to complement with commodities, REITs and high yield bonds. Sound like the beginnings of a reasonably diversified portfolio, right?

Perhaps not as much as you might think.

True portfolio diversification requires looking past the label of “asset class” to the underlying factors that ultimately drive returns. Today, ongoing volatility, rich valuations and high management fees mean that knowing what you own has never been more important.

  1. Investing is harder than ever
  2. Diversification has fallen short
  3. Investment management can be expensive

Read full commentary

Andrew Ang, PhD
Managing Director, BlackRock’s Head of Factor-based Strategies
Dr. Ang leads BlackRock’s factor-based platform, encompassing the development of factor-based offerings, factor analytics capabilities and advancing ...