Factors such as size, value, and growth have played a part in asset allocation decisions for decades. With the advent of factor indexing, passive investors gained access to a broader range of exposures. Today, investors can access factors both individually and in combination through a range of ETFs, tapping into a world of sophisticated strategies that were once available only via active management.
Unique Risk Premia
Over the long term, factors can offer their own return beyond what the market provides.
Because historically, factors have exhibited relatively low correlations, they can be helpful in diversifying a portfolio.
Factors strategies can help investors achieve specific goals, such as risk reduction over the long-term through diversification or by isolating distinct market characteristics.
The Factor Spectrum
Styles Tailored to Your Needs
S&P DJI offers several types of style indices, all rooted in a common approach that uses distinct sets of criteria to assess growth and value.
S&P Style Indices
S&P Style Indices provide broad exposure and are market-cap weighted. This approach makes them relevant benchmarks for evaluating the skill of active managers, and suitable for those seeking traditional “buy-and-hold” index-linked investments with a tilt toward a particular style.
S&P Pure Style Indices
S&P Pure Style Indices have a stricter definition of growth and value, resulting in more-concentrated style exposures for market participants seeking precise tools. Unlike the standard style indices, they are style-score weighted, and there are no overlapping securities between growth and value.
S&P Enhanced Value Indices
S&P Enhanced Value Indices measure top-tier stocks by value score, and account for both market cap and value score in their weighting.
In both developed and emerging markets around the world, most factors have historically delivered excess return relative to their benchmarks, as indicated by their 15-year information ratios. Find out how factor strategies perform in Australia, China, and Hong Kong, and learn how low volatility performs around the world.
Multi-Factor Indices: Combining Factors
While powerful individually, factors also can be used in combination depending on your market outlook and investment objectives. Some common factor combinations include:
Benefits of Multifactor Indices
Historically, the five core factors have generally exhibited weak correlations. Combining such factors can improve long-term performance and generate more stable excess returns. Because investors aren’t required to make decisions about when to shift among factors, multifactor approaches reduce the risk associated with timing factor exposures.
A History of Factor Innovation
A pioneer of factor indexing, we launched our first growth and value indices in 1992 and remain a leading innovator today.
View the full range of our factor indices.
Our broad suite of factor indices includes single- and multi-factor approaches for both developed and emerging markets, empowering investors to design factor strategies tailored to suit their specific needs.
Research & Insights
The Merits and Methods of Multi-Factor Investing
Are multiple factors better than one?
Distinguishing Style From Pure Style
The S&P Style Indices and S&P Pure Style Indices have distinct risk/return characteristics due to their methodological differences.
Blending Factors in Your Smart Beta Portfolio
What are the potential benefits of different multi-factor approaches?
The Beauty of Simplicity
How does the S&P 500 Low Volatility High Dividend Index compare to other dividend approaches?
Adapt to Changing Market Conditions: S&P Economic Cycle Factor Rotator Index
Look inside a dynamic factor rotation strategy designed to time factors in different phases of the business cycle.
Factor Tools at Your Fingertips
Factor Allocator is an innovative web-based information tool that allows users to analyze, build, deconstruct and replicate simulated portfolios based on S&P Factor Indices.