W&F Issue 11 2018

www.wealthandfinance-news.com 30 Wealth & Finance International - Issue 11 - 2018 Invesco, a leading asset manager with over 30 years of expertise in factor investing, has revealed that factor allocations and factor applications among North American investors are expanding. In a survey of over 300 institutional and wholesale factor investors globally, Invesco found that as respondents gain experience in utilizing factor portfolios they are increasing their usage. The concept of factor investing – an investment strategy in which securities are chosen based on certain characteristics and attributes – has existed since the 1950s. However, the strategy has only gained prevalent acceptance in recent years. Since Invesco first polled investors about factors in 2016, North American respondents have increased their adoption of factor strategies at an average rate of 5% per year. “At Invesco we have learned a lot internally from the results of the Global Factor Study, which gives us a keen sense of how investors have been approaching factors, as well as their future goals for utilization,” explained Vincent de Martel, Strategist with Invesco Global Solutions. “Understanding from factor investors what the drivers of adoptions were, what barriers they faced and what results they’ve had provides unique insights.” Invesco found that while an asset owner often commences their factor journey with a single strategy, as time goes by they tend to implement additional factor strategies and consider how to extend their factor portfolio from equities to fixed income and multi-asset. Nearly half of the respondents plan to increase their allocation to factor strategies in the next three years. Most investors strongly felt that past barriers to the adoption have been rapidly falling away, as more firms have a greater internal capability to implement factor investing. Those investors interviewed also cited the availability of a larger number of factor products as reasoning for an increased factor allocation. “Invesco has a 30-year history in factor investing in the U.S., with the factors most used by investors in North America, including Value, Size, Low Volatility and Momentum,” continues de Martel. “The feedback from the Global Factor Investing Study offers Invesco an understanding the investor factor experience provides us with a foundation to create products and portfolios that align with their future intentions.” Invesco conducted the survey through face-to- face interviews with respondents in Q1 and Q2 2018. The full study seeks to capture the depth, colour and context of the factor rationale of global investors. New global survey of over 300 investors finds rapid growth in factor strategies as experience in factor usage grows. Invesco Finds Factor Allocations Expanding Across North America