Uncovering alpha systematically

Factor investing is an investment approach that involves targeting specific drivers of return across asset classes. When properly calibrated, factor investing can help investors improve portfolio returns, reduce volatility, and enhance diversification.

T he factor investing industry is expected to grow from $1.9 trillion to $3.4 trillion by 2022. This exponential surge in growth underlines the effectiveness of factor investing in portfolio construction and its ability to improve risk-adjusted returns. Factor investing, however, can become very technical involving significant statistical analyses and in-depth modeling. This is why we have dedicated one of our practice areas to helping portfolio managers who are more fundamentally oriented incorporate quantitative approaches to their strategies. We do so by working closely with them to quarterback all their research, back-testing, and modeling work, so they can focus on idea generation and portfolio management. We call this approach “insource alpha,” given that we are bringing our expertise and analytical tools to your in-house team.

Platform Expertise

Factor Analysis

Gain insights into what is driving portfolio returns and volatility through in-depth factor decomposition

Portfolio Construction

Build efficient portfolios that eliminate duplication of risks and optimizes return

Yield Enhancement

Identify tactical opportunities to take advantage of short-term inefficiencies in the market

Correlation

Understand how current or potential asset class allocations will affect overall portfolio correlations

Optimization

Quickly generate and compare allocations tailored to objectives and constraints

Return Estimation

Estimate how your portfolio is expected to perform under various market scenarios