Rigorous and well-proven investment process

The investment process in factor funds

A factor fund can be seen as something in between active funds and index funds - both in terms of management and price. Factor funds aim to utilize well-documented factors (risk premiums) in the stock markets, which have provided additional returns beyond traditional benchmark indices.

Four leading factors

Among the most documented factors are

• value
• size
• momentum
• low volatility

The management team may pursue one or more factors in a management mandate. Within this genre, self-developed models are important tools for identifying new investments. It is the model that governs the buying and selling of shares, while the managers' job is to develop the models themselves. The models are then continuously monitored and improved.

The value factor is related to unpopular and undemanding companies, while the size factor is linked to the observation of smaller companies that over time have produced higher returns compared to larger companies. Momentum has also proven to be a source of excess returns, i.e. shares that continue their upward trend, even if there are no longer necessarily obvious fundamental reasons for this. Low volatility is in practice a stabilizing factor, which means that you can expect approximately the same return as the market over time, but with a lower fluctuation risk.

The management team

Ourr factor management team consists of four people, who also carry out our index management. Together they have an extensive quantitative education, as well as a lot of experience in managing broad portfolios.