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Tag: Factors

Factor Investing 3 – Funds

Factor Investing 3 – Funds

Today’s post is the third in a series on factor investing, otherwise known as smart beta.

The story so far

Passive Active Spectrum

Passive Active Spectrum

So far we’ve written two articles about Factor Investing, each based around index firm MSCI’s classifications.

  • Factor investing is the use of a rule other than market-cap weighting to allocate money within a pooled investment fund.

Active vs Passive

Active vs Passive

Different observers would place factor investing at different points along the passive / active spectrum.

  • They deviate from market-cap weighted indexes, which now monopolise the term “passive”.
  • But factor funds require no active management from the private investor.

MSCI FaCS

MSCI FaCS

MSCI have six basic factors:

  • Value
  • Small Size
  • Cyclicality