Low Volatility is the equity factor winner for 2018

In the fourth quarter, Dividend Yield was also a strong competitor

Nick KalivasTime to read: 5 min

The fourth quarter of 2018 was exceedingly tough for US equities, with no gains to be found in any of the indexes tracked by our quarterly factor scorecard. And yet, certain factors — namely Low Volatility and Dividend Yield — were able to significantly cushion the blow suffered by the broad market. While the S&P 500 Index lost 13.52% in the quarter, the S&P 500 Low Volatility Index fell just 5.22%, and the S&P 500 Low Volatility High Dividend Index fell just 6.77%.

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US/China trade conflict creates factor opportunities

Low Volatility and Quality offer potential benefits in stressed markets

Time to read: 3 min

In my discussions with clients from around the globe the past few months, I have been presenting the view that the US/China trade conflict will be a long, hard-fought battle that will likely play out over years, not months — and I still believe that despite the nations’ recent agreement made at the G-20 meeting. If the trade dispute indeed persists, the disruption is likely to weigh on economic growth rates, and equity markets are likely to continue to exhibit higher-than-average levels of volatility. In this scenario, I believe the Low Volatility and Quality equity factors may be especially attractive.

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Factor use is growing among financial advisors and institutional investors

Our new global study examines trends in factor investing around the world

Time to read: 2 min

Factor investing is growing rapidly — not only are more investors adopting factor strategies, but as investors gain experience, they increase their use of them. This is one of the key findings from our recent Global Factor Investing Study, which is based on face-to-face interviews and discussions with more than 300 institutional and wholesale factor investors around the world — including financial advisors, pension funds, private banks and insurance companies.

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Three ways investing is like baseball

Both endeavors are driven by statistical analysis. Explore three different ways that managers can build their ‘teams.’

Time to read: 2 min  

As I write this blog, it’s mid October, and the Major League Baseball playoffs are in full swing. Perhaps more than any other sport, baseball is famous for statistical analysis, and there are seemingly endless ways to evaluate every player. Similarly, there are many ways to evaluate stocks, and different portfolio managers assemble their “teams” using a variety of methods. To understand the differences, consider the ways that coaches can choose players for a baseball team.

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Growth and Momentum continue 2018 factor leadership

Q3 performance shows that different factors outperform in different market environments

Nick Kalivas

Time to read: 5 min

Factor returns displayed a wide dispersion in the third quarter, with a 12.2% spread between the best-performing factor index (Russell Midcap Pure Growth) and the worst-performing factor index (S&P 600 Pure Value). Year to date, the spread is a hefty 31.0%.1 What does this mean? Investors who judge the equity market based on traditional benchmarks may not realize the market opportunities that are present “underneath the hood” via factors.

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