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Multi-Factor Equity

Offering investment options that lie between active and passive investing

HSBC Multi-Factor Equity aims to deliver consistent outperformance against a market cap weighted index in a systematic and risk-controlled manner. The strategy is designed to provide investors with exposure to multiple factor premia, such as value, quality, momentum, low risk and size.

Markets are not fully efficient which makes them prone to mispricing over the short-term. Anomalies can persist for a while but, ultimately, there is mean-reversion to fundamentals – this creates opportunities for long-horizon investors who focus on fundamentals.

Why consider Multi-Factor Equity investing

Equity markets exhibit deviations from simple beta/return relationships which offers a potential opportunity to outperform market cap weighted indices. This can be achieved by using systematic strategies that target equity market segments which exhibit high exposures to factors that deliver anomalous returns. By targeting a broad exposure to cyclical, defensive, and dynamic factors, the benefits of diversification have enabled multi-factor strategies to realise long-term factor outperformance whilst smoothing their cyclicality.

Return enhancement Harvests long-term factor risk premia, targeted to deliver strong risk-adjusted returns.
Risk management & control Well-run Multi-Factor portfolios should be built on a flexible framework that can accommodate a wide range of client-specific constraints and tracking error budgets.
Efficient cost management Multi-Factor Equities can provide a low-cost solution, allowing better use of cost budgets.

Source: HSBC Asset Management. For informational purposes only and should not be construed as a recommendation for any investment product or strategy. The views expressed above were held at the time of preparation and are subject to change without notice.

Investing with HSBC Asset Management

1

Rich experience in working with clients to implement customised portfolios

The flexibility of our factor investing framework enables our process to accommodate client-specific guidelines such as tracking error ranges, country restrictions, sector risk exposures and ESG requirements.
2

Robust investment framework

Our pure factor approach together with fully aligned risk models and flexible portfolio optimisation tools developed and owned by the team, give us a sustainable edge in the factor investing space.
3

Fully bottom up

Stock by stock signals to drive a bottom-up portfolio construction process with proprietary factor definitions.
4

Well-resourced research team

Our fully proprietary approach is designed and managed by a globally integrated research, portfolio management and trading team. We empower them to focus on their own area of specialist expertise as we believe this delivers the best outcomes for our clients.

Risk warnings

The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. Where overseas investments are held the rate of currency exchange may also cause the value of such investments to fluctuate.

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