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Factor investing

German: Faktorinvesting

Deliberately investing in stocks with traits historically linked to higher returns – such as value, size, momentum or quality.

Fama and French showed that factors explain much of the difference in returns between stock portfolios. Whether factor premiums compensate for risk or stem from investor errors is debated. They swing a lot and can disappear for years, as value did from around 2007 to 2020.