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How Active Managers are using Factor Strategies

New report from BlackRock

One of the key investing trends of the last decade has been the adoption of factor investing - the recognition of "risk factors", which historically have persistently driven excess return within and across asset classes.

This way of understanding returns has become so widespread that some investment consultants now expect factor-based analysis from traditional asset managers, forcing them to evaluate their own returns within a factor framework.

BlackRock has just published this new guide, below, aimed at active equity managers wanting to better understand how to they can use factor investing to improve performance.

Enhance your skill: how active managers are using factor strategies (BlackRock)
(For compliance reasons, this paper is only accessible in the USA)
This new report provides an excellent introduction to factor investing, examining the main equity risk factors and their historic excess returns. The paper uses case studies to examine how active managers can use factor ETFs to improve performance; for instance by adding factors that are complementary to existing holdings, hedging unintended exposures, expressing factor views, or to better manage liquidity.

Savvy Investor

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