Thursday 14th October 2021
The Five Principles of Australian Factor Investing: Invesco
Factor investing is a widely adopted discipline, complementing the role of traditional investment managers. This paper explores the five principles of factor investing in Australia.
Executive summary
Factor investing is a widely adopted discipline, complementing the role of traditional investment managers. This paper explores the five principles of factor investing in Australia. Principles which lnvesco’s Australian Equity capability have embraced to successfully outperform the ASX benchmark, integrate ESG considerations and keep management expenses low.
| The Five Principles | |
| 1. Everyone’s a factor investor | All active equity investors seek superior returns from companies having growing earnings, with quality management teams, which are attractively valued. |
| 2. Australian equities is a growth investor’s market | Growth – primarily via earnings momentum – is the primary driver of Australian equity returns. Quality and Value are powerful complements. |
| 3. Diversification is key | Factor diversification through the cycle, stock diversification to capture factor characteristics, and attribution diversification for reliable return outcomes. |
| 4. Factor investing and ESG are perfect partners | Dual objectives of returns and ESG outcomes can be uncompromisingly achieved. Efficient data use, ESG integration and investment stewardship. |
| 5. Big on returns, small on cost | Big on data and technology, small on capital intensive overheads. |
