Factor Investing Grows in Popularity: Is It Right For You?

A recent study completed by Invesco found that adopting factors in diverse and resilient portfolios is more popular among investors.  In the past year, 41% of survey respondents have increased their allocations with factor investing over the past year.

Many respondents believe that factor investing could deliver better results, especially in light of some of the biggest challenges in the market right now, inflation and stalled economic growth. As of now, however, mixed results were reported by factor investors who had gone that route in the past year. A total of 36% of respondents said factors underperformed, but 41% said they overperformed expectations, and the rest of people said factors did not make a difference in their outcomes.

Furthermore, those who are interested in fixed-income assets believe that factors will get better outcomes. Factor investing focuses on attributes that can get better returns overall. Both macroeconomic factors and style factors may influence the results achieved. While macro factors look at big picture risks across multiple asset classes whereas style factors get into returns and risks within asset classes.