STRATEGIES
Asia ex Japan Institutional Website Attestation
Before we proceed, please take a moment to review and accept the following terms and Conditions:
Please read this page before proceeding, as it explains certain restrictions imposed by law on the distribution of this information and the jurisdictions in which our products and services are authorised for sale. It is your responsibility to be aware of and to observe all applicable laws and regulations of any relevant jurisdiction.
By entering this website, you are agreeing that you have reviewed and agreed to all terms contained herein including any legal or regulatory restrictions, and have consented to the collection, use and disclosure of your personal data as set out in the Privacy section referred to below.
By confirming below, you also acknowledge that you:
The information contained in this website (this “Website”) (including without limitation the information, functions and the documents herein (together, the “Contents”)) is made available for informational purposes only.
Access Subject to Local Restrictions
In Singapore, accredited/institutional investors as defined in Section 4A of the Securities and Futures Act, Chapter 289 of Singapore. In Hong Kong, Professional Investors (as defined in the Securities and Futures Ordinance (Cap.571 of the laws of Hong Kong) and any rules made under that ordinance). In South Korea, Qualified Professional Investors (as defined in the Financial Investment Services and Capital Market Act and its sub-regulations). In Taiwan, Professional Investors. In Australia and New Zealand, wholesale client as defined under the Australian Corporations Act 2001 (Cth) and the New Zealand Financial Advisers Act 2008 respectively. In China, this may not be distributed to individuals resident in the People's Republic of China ("PRC", for such purposes, excluding Hong Kong, Macau and Taiwan) or entities registered in the PRC unless such parties have received all the required PRC government approvals to participate in any investment or receive any investment advisory or investment management services. For Other APAC Countries, Institutional Investors only (or professional/sophisticated/qualified investors, as such term may apply in local jurisdictions).
This Website and the Content herein are not intended for, or directed to, persons in any countries or jurisdictions that are not enumerated above, or to an audience other than as specified above.
This Website or information contained or incorporated by reference has not been, and will not be submitted to, become approved/verified by, or registered with, any relevant government authorities under the local laws. This Website is not intended for and should not be accessed by persons located or resident in any jurisdiction where (by reason of that person's nationality, domicile, residence or otherwise) the publication or availability of this Website is prohibited or contrary to local law or regulation or would subject any BlackRock entity to any registration or licensing requirements in such jurisdiction.
It is your responsibility to be aware of, to obtain all relevant regulatory approvals, licenses, verifications and/or registrations under, and to observe all applicable laws and regulations of any relevant jurisdiction in connection with your entrant to this Website.
If you are unsure about the meaning of any information provided, please consult your financial or other professional adviser.
No Offer
The Contents have been prepared for informational purposes only without regard to the investment objectives, financial situation, or means of any particular person or entity, and the Website is not soliciting any action based upon them.
This material should not be construed as investment advice or a recommendation or an offer or solicitation to buy or sell securities and does not constitute an offer or solicitation in any jurisdiction where or to any persons to whom it would be unauthorized or unlawful to do so.
No Warranty
The Contents are published in good faith but no advice, representation or warranty, express or implied, is made by BlackRock or by any person as to its adequacy, accuracy, completeness, reasonableness or that it is fit for your particular purpose, and it should not be relied on as such. The Contents do not purport to be complete and is subject to change. You acknowledge that certain information contained in this Website supplied by third parties may be incorrect or incomplete, and such information is provided on an "AS IS" basis. We reserve the right to change, modify, add, or delete, any content and the terms of use of this Website without notice. Users are advised to periodically review the contents of this Website to be familiar with any modifications. The Website has not made, and expressly disclaims, any representations with respect to any forward-looking statements. By their nature, forward-looking statements are subject to numerous assumptions, risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.
No information on this Website constitutes business, financial, investment, trading, tax, legal, regulatory, accounting or any other advice. If you are unsure about the meaning of any information provided, please consult your financial or other professional adviser.
No Liability
BlackRock shall have no liability for any loss or damage arising in connection with this Website or out of the use, inability to use or reliance on the Contents by any person, including without limitation, any loss of profit or any other damage, direct or consequential, regardless of whether they arise from contractual or tort (including negligence) or whether BlackRock has foreseen such possibility, except where such exclusion or limitation contravenes the applicable law.
You may leave this Website when you access certain links on this Website. BlackRock has not examined any of these websites and does not assume any responsibility for the contents of such websites nor the services, products or items offered through such websites.
Trademarks, Copyrights and other Intellectual Property
The content contained on this Website is owned or licensed by BlackRock and its third-party information providers and is protected by applicable copyrights, trademarks, service marks, and/or other intellectual property rights. Such content is solely for your personal, non-commercial use. Accordingly, you may not copy, distribute, modify, post, frame or deep link this Website, including any text, graphics, video, audio, software code, user interface design or logos. You may download material displayed on this Website for your personal use provided you also retain all copyright and other proprietary notices contained on the materials. You may not distribute, modify, transmit, reuse, repost, or use the content of this Website for public or commercial purposes, including all text, images, audio, and video, without BlackRock's written permission. Modification or use of the materials for any other purpose violates BlackRock's intellectual property rights.
All trademarks, service marks, trade names, and logos displayed on this Website are proprietary to BlackRock and/or their respective owners. Nothing contained on this Website should be construed as granting, by implication, estoppel, or otherwise, any license or right to use any trademark displayed on this Website without the written permission of BlackRock or such other third party that may own the trademark displayed on this Website. Your use of the trademarks displayed on this Website, except as provided herein, is strictly prohibited.
The use of the images displayed on this Website by you, or anyone else authorized by you, is prohibited. Any unauthorized use of the images may violate copyright laws, trademark laws, and the laws of privacy and publicity, and communications, as well as other regulations and statutes. If you download any information from this Website, you agree that you will not copy it or remove or obscure any copyright or other notices or legends contained in any such information.
Additional Information
Investment involves risks. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase.
Privacy
Your name, email address and other personal details will be processed in accordance with BlackRock’s Privacy Policy for your specific country which you may read by accessing our website at https://www.blackrock.com.
Please note that you are required to read and accept the terms of our Privacy Policy before you are able to access our websites.
Once you have confirmed that you agree to the legal information herein, and the Privacy Policy – by indicating your consent – we will place a cookie on your computer to recognize you and prevent this page from reappearing should you access this site, or other BlackRock sites, on future occasions. The cookie will expire after six months, or sooner should there be a material change to this important information.
The ideas behind factors aren’t new. But their use is being enhanced by data and technology. This has helped to increase the popularity of factor investing amongst institutional investors.
Learn more about factors by clicking through the tabs below.
Factors are the foundation of portfolios—the broad, persistent forces that have driven returns of stocks, bonds and other assets.
Factor investing leverages advancements in today’s data and technology to deliberately seek these historical return drivers in portfolios. Understanding how factors work can help you capture their potential for excess return and reduced risk, just as leading institutional investors and active fund managers have done for decades.
Global markets are made up of dozens of asset classes and millions of individual securities…making it challenging to understand what really matters for your portfolio. But there are a few important drivers that can help explain returns across asset classes. These FACTORS are broad, persistent drivers of return that are critical to helping investors seek a range of goals from generating returns, reducing risk, to improving diversification.
Today, new technologies and expanding data sources are allowing investors to access factors with ease.
Factors are the foundation of investing, just as nutrients are the foundations of the food we eat. We need carbohydrates and protein to power through the day, which we can find in different foods like bread, milk, and fruit. Putting together a balanced diet means understanding what nutrients are contained in our food, and choosing the mix that best supports our body’s needs.
Similarly, knowing the factors that drive returns in your portfolio can help you to choose the right mix of assets and strategies for your needs.
There are two main types of factors that drive returns. Macro factors like the pace of economic growth and the rate of inflation can help to explain returns across asset classes like equity or bond markets.
Style factors can help explain returns within those asset classes. For example, Value stocks – those that have low prices relative to fundamentals – have historically generated returns greater than the broad market.
Factors can help us build portfolios that better suit individual needs; just as knowing the nutrients in your food can help your body perform. Similarly, investors looking for downside protection in a volatile market environment might add exposure to minimum volatility strategies to seek reduced risk, while Investors who are comfortable accepting increased risk might look to more return-seeking strategies like momentum.
Now – why do factors work? Extensive research, including that of Nobel prize winners, has proven that certain factors have driven returns for decades. These factors have generated returns due to the following three reasons: an investor’s willingness to take on risk, structural impediments, and the fact that not all investors are perfectly rational all the time.
Some factors earn additional returns because they involve bearing additional risk, and may underperform in certain market regimes.
Some factors arise from structural impediments, those investment restrictions or market rules that make certain investments off-limits for some investors, creating opportunities for others who can invest without those constraints.
And finally, some factors capture investor behaviour, that is, actions of the average investor that are not always perfectly rational. Sometimes people want French fries instead of salad even if they are watching their cholesterol. These behavioural biases can give rise to investment opportunities for those who can take on a contrarian view.
Let’s discuss ways to access factors. Advancements in technology and data allow investors to take advantage of these time-tested ideas in new ways, from smart beta to enhanced factor strategies.
Smart beta strategies target factors using a rules-based approach, usually with the goal of outperforming a market-cap weighted benchmark. Smart beta strategies are now widely available in ETFs and mutual funds, making factor strategies affordable and accessible to every investor.
Enhanced strategies use factors in more advanced ways - trading across multiple asset classes, sometimes investing both long and short. Investors use these enhanced factor strategies to seek absolute returns or to complement hedge fund and traditional active strategies.
Factors can help to power your investments and can help to achieve your goals.
BlackRock is a leader in factor investing, launching the first factor fund in 1971 and driving innovation in the category for over 40 years.
Institutional investors and active managers have been using factors to manage portfolios for decades. Today, data and technology have democratized factor investing to give all investors access to these historically persistent drivers of return.
There are two main types of factors that have driven returns: macroeconomic factors, which capture broad risks across asset classes; and style factors, which help to explain returns and risk within asset classes. These factors have generally had low correlations with each other and therefore tended to perform well at different parts of the economic cycle.
Hover over each factor to learn more.
Stocks discounted relative to their fundamentals
Exposure to the business cycle
Stable, lower-risk stocks
Stocks with upward price trends
Financially healthy companies
Smaller, high-growth companies
Income incentive to hold riskier securities
The risk of interest-rate movements
Exposure to changes in prices
Default risk from lending to companies
Political and sovereign risks
Holding illiquid assets
BlackRock offers a range of solutions designed to tap into the potential of factors –from low-cost, efficient smart beta ETFs to smart beta target date funds to dynamically managed and enhanced factor strategies.
Smart beta strategies are the "gateway" to factor investing - designed to harvest broad, persistent drivers of returns by taking advantage of economic insights, diversification and efficient trading execution.
Smart beta strategies screen thousands of securities to capture single or multiple factors transparently and efficiently. They seek a different outcome than a traditional index return, such as improved performance, lower risk, or both.
Examples of smart beta strategies:
Investors can access factors in more advanced ways with dynamic strategies that invest across multiple asset classes and may employ leverage and shorting. Enhanced factor strategies may allow managers to make active factor decisions to try to generate excess returns.
Investors can use these strategies to seek absolute returns or to complement hedge fund and traditional active strategies.
BlackRock’s enhanced factor-based investment strategies:
Smart beta is one subset of factor investing. Factor investing harnesses the power of broad and persistent drivers of return. Factor investing can refer to macro factors (which affect returns across asset classes) as well as style factors (which affect returns within asset classes) and can be implemented with or without leverage. Smart beta strategies generally refer to style factors within a single asset class, implemented without leverage, most commonly in an ETF.
When it comes to factor-based strategies, investors have a lot of options. Each strategy is constructed in a unique way and may have different risks. It’s important that investors understand what risks are applicable to each strategy and how those may fit within their overall portfolio. Investors who choose long-short factor strategies will add risks associated with leverage.
What are some of the myths associated with factor-based investing?
One of the most pervasive myths around factor investing is that it must be used instead of indexed or active investments. Factor-based strategies, including smart beta ETFs, can be used both to replace and to complement traditional index or active investments in the portfolio.
As with any investment, there's no guarantee of performance. Individual factors have tended to perform well at different parts of the economic cycle, and may be less correlated with equity market moves. Be aware of this aspect of factor investing as you investigate whether any particular strategy makes sense with your investment goals. A multi-factor investment is diversified across factors and may help to reduce the effect of this cyclicality.
BlackRock has been at the forefront of factor-based investing for decades and continues to innovate new strategies to help address clients’ investment challenges. BlackRock offers a variety of ways to implement the time-tested principles of factor investing. These range from smart beta ETFs and target date funds, which offer lowcost, efficient access to factor strategies, to multi-asset, multi-factor strategies, that incorporate BlackRock's active insights, invest across asset classes and employ leverage and shorting.
You can also tap into BlackRock's deep experience with investment factors 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.
Stay up to date on the latest research and insights from BlackRock’s factor investing professionals.
Ever struggled to introduce the concept of factor investing? Watch the video and tell a story.
Over recent years, factors have become a trending topic within the asset management industry, academia and the media alike. As the interest in factors has increased, so too have the questions BlackRock receives about what factors are and how investors can use them.
To help answer these questions, BlackRock has built a bespoke educational program that aims to demystify the world of factor-based investing. This 4-level program takes investors from the basics of factor investing all the way through to advanced factor investment techniques.
BlackRock’s Factor Certification Program launched in Hong Kong & Singapore in September 2018 with levels 1 & 2. It will be held again in March and September 2019.
If you’re interested in learning more about BlackRock’s Factor Certification Program and being updated with the dates of the next events, sign up to receive our factor updates.
The factor investing landscape has proliferated in recent years and we project it will continue to grow. Our Factor Investing: 2018 landscape introduces you to factors and our view on its future growth.
We believe that a form of factor timing, best described as factor tilting, can help generate uncorrelated returns.
If you’re an investor, you should care about “factors.” Learn why with BlackRock’s introduction to Factors
What is Fixed Income Smart Beta and why should investors care about it? Discover why in this introduction to fixed income factor investing.