FACTOR INVESTING

Minimum volatility investing seeks to build a portfolio of stocks that exhibits less variability than the broad market. It aims to provide investors with a smoother ride within equity allocations by creating a portfolio that exhibits less swings — up or down — than the market.

Quality investing strategies look for stocks that have higher quality earnings. That means that we’re looking for stocks that are profitable, have low leverage, and demonstrate consistent earnings over time.¹ Quality has traditionally outperformed the broad market during periods of high volatility.

The size factor focuses on smaller, more nimble companies. Smaller companies may be more nimble, and can potentially more easily adjust and identify new investment opportunities in the marketplace. Smaller size companies have tended to perform well in the early stages of an economic upswing.

Momentum investing is concerned with stocks that are trending in a particular direction. Sometimes investors are irrationally exuberant or incomprehensibly dour. The strategy tends to work best in upward or downward trending markets.

Select stocks that are lower cost relative to their peers after controlling for fundamentals. Cheapness does not necessarily stand for upside potential –sometimes a stock or even a sector remains cheap for a reason. Value has tended to perform well in periods of growth or risk-on environments.

Multifactor strategies build upon the long-standing concept of diversification: that combining exposures to multiple drivers of returns — otherwise known as factors — can help soften the effect of drawdowns and increase the potential for outperformance.

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