A factor allows for identifying a basket of stocks subject to one’s risk-return appetite. : Factor investing (FI) is a strategy being increasingly embraced by investors as the third style of investing, in addition to active and passive investment. It seeks to combine the benefits of both active and passive investing strategies. The goal is to obtain alpha (excess return of an investment relative to the return of a benchmark index), and to increase diversification at a cost lower than traditional active management, albeit marginally higher than straight index investing.
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