The Challenges of Multi-Factor Investing

By Jack Forehand and Justin Carbonneau

The basic theory of multi-factor investing is pretty simple. It has been widely proven that factors like value and momentum can outperform the market over long periods of time. But no reward comes without risk. In this case, the risk is the significant periods of underperformance that the factors can endure. That is where multi-factor investing comes in. It offers investors an opportunity to blend factors together to reduce risk and smooth out those bad periods.  But building a multi-factor investment strategy can be much more difficult than it seems and requires a series of decisions that can have a significant impact on the end result. In this episode, we look at multi-factor investing and the important factors to keep in mind when building a multi-factor portfolio.  ABOUT THE PODCAST Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES https://www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA https://www.validea.com FOLLOW OUR BLOG http://blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL https://www.valideacapital.com FOLLOW JACK Twitter: https://twitter.com/practicalquant LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter: https://twitter.com/jjcarbonneau LinkedIn: https://www.linkedin.com/in/jcarbonneau

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