2019_01_22 — “Index Investing: You May Think You Just Own the Market, but You Are Really a Factor Investor”

Index Investing: You May Think You Just Own the Market, but You Are Really a Factor Investor

Index Investing: You may think you just own the market, but you are really a factor investor

  • An S&P 500 portfolio is mostly a quality, value, and momentum portfolio
  • Across many indices, value and momentum factors tend to be increasingly dominant
  • Minimum volatility and size factors may provide portfolio diversification benefits for index heavy investments
  1. Minimum volatility — Lower beta (risk) stocks
  2. Quality — Equities of companies with healthy balance sheets
  3. Value — Stocks that are inexpensive relative to fundamentals
  4. Momentum — Stocks that are moving positively
  5. Size — Smaller, more nimble companies

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Michael Ashley Schulman

Michael Ashley Schulman

Avid traveler and art fan, also Partner & Chief Investment Officer @Running Point Capital, a multifamily office and ultra high-net-worth money-management firm