Investor Corner/The asset classes

2.6 Factor Investing and ESG

Systematic styles built around specific characteristics, value, momentum, quality and low volatility, plus how environmental and governance screens actually work inside a fund. Factor investing tries to isolate the specific characteristics, cheapness, momentum, quality, that have historically driven returns, rather than picking stocks on a manager’s judgement alone. ESG applies a different lens, screening for environmental and governance standards, and the two are often combined but answer different questions about a fund.