الاستثمار العاملي هو مفهوم يتعلق بالاستثمار في الأصول أو المشاريع التي تعود بالنفع العام، أي أنها تستهدف تحسين الرفاهية العامة وتعزيز التنمية الاقتصادية والاجتماعية. يمكن أن يشمل هذا النوع من الاستثمارات مشروعات البنية التحتية، التعليم، الصحة، وحماية البيئة، حيث يسعى المستثمرون إلى تحقيق عوائد مالية مجزية بالإضافة إلى التأثير الإيجابي على المجتمع.

Definition and Examples of Factor Investing

Factor investing is a type of portfolio management where stocks are selected based on predefined factors. This is typically done using five investment factors to identify individual stocks: value, size, volatility, momentum, and quality. Factor investing also utilizes macroeconomic factors such as interest rates, economic growth, credit risk, liquidity, and inflation to diversify portfolios across different asset classes and geographies.

How Does Factor Investing Work?

There are many mutual funds and exchange-traded funds (ETFs) that focus on each of the mentioned factors. If you want to invest in low volatility, you can simply look for a low volatility exchange-traded fund or a fund that targets the lowest volatility. Since ETFs are passively managed (i.e., stocks are selected based on a screen or index, rather than by an active manager), most of them have very low expense ratios. Let’s explore how each of the factors is utilized and why they are effective.

Value

The value factor was originally based on the price-to-book ratio of stocks. This has evolved over time, and now most factor funds use a combination of ratios including price-to-book and price-to-earnings. Some funds have even developed unique value metrics to use as a competitive advantage.

Size

Stocks in smaller companies tend to yield higher returns than stocks in larger companies. Funds that use this factor focus on stocks with small market capitalizations. Small-cap companies are less established than large-cap companies and therefore are often riskier. This additional risk, combined with more growth opportunities, typically drives superior returns.

Volatility

Volatility is measured using beta, which compares the volatility of a stock’s price to the volatility of the market. For example, if a stock has a beta of 1.50 and the market rises 10%, the stock is expected to rise 15%. Volatility is generally used as a gauge of risk. Over time, low-volatility stocks tend to outperform because they are considered less risky. Many investors use the low volatility factor for diversification. Low volatility tends to perform well in down markets, so if you invest based on the small cap factor (which carries higher risk), you can still achieve superior performance with the low volatility factor during down markets.

Momentum

Momentum is calculated by ranking past returns over a recent period (usually up to one year) and selecting the top five or top quarter of stocks with the highest returns. Momentum, or trend-following, works because investors tend to want to invest in stocks that are already rising.

Quality

Everyone has their own measure of quality. For some, it comes down to return on capital. For others, it relates to profitability. For some, it is about the actual quality of earnings when compared to cash flows. All of these measures perform well over time. If you invest in a quality ETF, the fund’s prospectus will outline how the fund defines quality.

What Does This Mean for Individual Investors?

It is important to keep in mind that factors are expected to outperform the broader market primarily over the long term. Each of these factors has longer periods in its history where it has underperformed the broader market or even experienced significant drawdowns. Managers attempt to overcome this by diversifying across factors and using macroeconomic factors to build their portfolios. This approach is referred to as smart factor investing.

Key Takeaways

Factor investing is a type of portfolio management that focuses on stocks that excel in proven factors. The factors are value, size, growth, volatility, and quality. Smart factor strategies diversify portfolios among various factors to create smoother returns.

Source:

https://www.thebalancemoney.com/what-is-factor-investing-5209104