Image:
The Research Affiliates report warned factor ETFs can be "serially" correlated to one another
ETF providers are failing to highlight the specific risks of factor investing, according to a new white paper by Research Affiliates.
The report published by the global research house, entitled Ignored Risks of Factor Investing, criticised one of the fastest-growing areas of the ETF market as providers and academics were "severely" understating the risks of investing in the space. The factor investing industry reached $1.9trn assets under management (AUM) at the end of 2017 (see chart, below), up from $643bn in 2011, with BlackRock predicting it could hit $3.4trn in 2022. However, the Research Affiliates report warned factor ETFs can be "serially" correlated to one another, meaning multiple factors can be exposed to...
To continue reading this article...
Join Investment Week
- Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
- Get ahead of regulatory and technological changes affecting fund management
- Important and breaking news stories selected by the editors delivered straight to your inbox each day
- Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
- Be the first to hear about our extensive events schedule and awards programmes
