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Serbian
Journal of Management
2017,
vol. 12, iss. 1, pp. 65-75
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Investment
innovation trends: Factor-based investing
Sanja
Centineoa and Santo Centineob
a-University
of East Sarajevo, Faculty of Economics, Pale, B&H
b-Swiss Life Asset Management AG, Zürich, Switzerland
e-mail: sanja.centineo@yahoo.com
Abstract
This
article shows that it can take a long period of time until research
knowledge finds its application in practice and get disseminated as
innovation trend. Factor-based investing is such an example. Having its
developing roots in the nineties, it took more than two decades until
this approach was detected by the by investment community. The goal of
this article is to recall the definition of factor investing, present
its historical evolvement and motivate its recent break-through and
current trend among investment practitioners (known also under the
notion smart beta). It aims at familiarizing with this investment
approach from a practical perspective and highlighting its diversifying
benefits in a portfolio context with the potential to outperform the
market on risk-adjusted basis.
This Work is licensed under a Creative Commons Attribution 4.0 License. Keywords
Smart
beta, risk factors, market anomalies, diversification, outperformance.
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