Factor Investing Pure and Simple

Factor Investing Pure and Simple

Published By: HSBC Global Asset Management | 27/07/2017

Common smart beta strategies are based on well-established risk premia factors: value, small cap, momentum, low volatility and quality. HSBC has uncovered that many of these indices exhibit unintended exposures to unrelated factors because of their simplistic construction methods. 

In Factor Investing: Pure and Simple, HSBC investigates measuring the purity of smart beta strategies based on the portion of active risk driven by the targeted factor. The paper also explores practical applications and strategies to enhance investment performance through factor investing.

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