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September 2023
AAM Magazine
September 2023
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Global asset owners look to factor investing in bear market, survey finds

By Hui Ching-hoo   
September 28, 2022

A majority of global institutional investors believe factor investing can help them to steer through market volatility and outperform in an inflationary environment with slow economic growth, according to new survey findings by US asset manager Invesco.

Factor investing strategy is aimed at helping investors to achieve their investment objectives by understanding the building blocks of their portfolios.

Invesco polled 151 global asset owners in April this year on their strategic allocation for factor investing.

Some 67% of respondents agreed that factor investing helped them to manage market volatility in the 12 months to March, while 64% had growing faith in the strategy.

Meanwhile, 41% increased allocation to factor investing and 39% plan to do so over the next year.

“This year’s study found respondents expect factor-based strategies to outperform in an inflationary environment with slow economic growth,” Invesco says in a statement on September 26.

Asset owners also believe the current market environment “makes factor investing in fixed income more attractive as a better way to manage volatility and diversity portfolios”, the firm says, noting that 92% now believe factor investing can be successfully applied to bonds, a sharp increase from 61% in 2016.

“The fact that investors actually increased their support and exposure to factor strategies through this latest global bear market cycle speaks to how comfortable and confident they have become with a factor approach as a pillar of investing alongside active and passive,” Stephen Quance, global director of factor investing at Invesco, says in the statement.

Atlanta-based Invesco had US$1.41 trillion of assets under management as of August 2022.