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Factor investing: the third pillar of investing alongside active and passive

Factor investing: the third pillar of investing alongside active and passive

This article examines what it means to be active or passive in today’s complex investment landscape. As factor strategies increasingly become mainstream, investors face more choices than ever. Adding to the confusion is terminology that is commonly misused when trying to distinguish between strategies. We propose an inclusive framework to help comprehend terms like active, passive and factor investing in a way that aids decision making.

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