Factor Investing

Factor Timing

Definition

What is Factor Timing?

Changing factor exposure based on forecasts of which factors will outperform.

Example in practice

The manager increases value exposure after valuation spreads widen.

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An approach targeting broad, persistent return drivers such as value, size, momentum, quality, or low volatility.

The tendency for relatively cheap securities to perform differently from expensive securities over time.

The return pattern associated with smaller companies relative to larger companies.

A legal or ethical duty to act loyally and carefully in another person's best interest.

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