Factor investing

The price of the stock along with the earnings revision trend has skyrocketed in the last 18 months, and momentum is still behind it. Yet even with all that price appreciation, Vistra still trades with a forward earnings multiple of 21.7x. Today, quantitative investment managers use models for security selection, portfolio construction, risk hedging and more. For example, it’s common among investment team clients to decompose a portfolio across factor and idiosyncratic exposure and hedge out unwanted exposures, which could include the style factors, while leaving the stock specific elements to drive investment risk and return. Analysts note multi-factor strategies outperforming single-factor portfolios in volatile conditions, with average returns of 5.3% YTD. "Factor investing" blending momentum, value, and low-volatility is seeing increased institutional adoption.