IFAs keep reading about Multi Factor Investing…
An area of markets that looks like a bubble to me…..amounts invested were reportedly £3bn in 2009, but now stand at twenty times that with some £70bn committed.
So we asked Ken Baksh, our investment fund manager in residence:
In my opinion,factor investing just a fancy name for investment process which tries to pigeon hole certain stock characteristics rather than conventional country or sector or market cap weighted. This could be represented by value versus growth,or size or volatility or quality of company or momentum etc
Everyone will claim that their strategy will outperform,and advisers need to check the rigour of the back testing used by the fund managers very carefully! Two issues stand out in cases.
Multi-factor needs to be posted into a pigeon hole called process.