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Invesco Finds Factor Allocations Expanding Across North America

New global survey of over 300 investors finds rapid growth in factor strategies as experience in factor usage grows

ATLANTA, Nov. 13, 2018 /PRNewswire/ -- Invesco, a leading asset manager with over 30 years of expertise in factor investing1, has revealed that factor allocations and factor applications among North American investors are expanding. In a survey of over 300 institutional and wholesale factor investors globally, Invesco found that as respondents gain experience in utilizing factor portfolios they are increasing their usage.

Invesco Ltd. logo. (PRNewsFoto/Invesco, Chris Wilson)

The concept of factor investing – an investment strategy in which securities are chosen based on certain characteristics and attributes – has existed since the 1950s. However, the strategy has only gained prevalent acceptance in recent years. Since Invesco first polled investors about factors in 2016, North American respondents have increased their adoption of factor strategies at an average rate of 5% per year.

"At Invesco we have learned a lot internally from the results of the Global Factor Study, which gives us a keen sense of how investors have been approaching factors, as well as their future goals for utilization," explained Vincent de Martel, Strategist with Invesco Global Solutions. "Understanding from factor investors what the drivers of adoptions were, what barriers they faced and what results they've had provides unique insights."

Invesco found that while an asset owner often commences their factor journey with a single strategy, as time goes by they tend to implement additional factor strategies and consider how to extend their factor portfolio from equities to fixed income and multi-asset. Nearly half of the respondents plan to increase their allocation to factor strategies in the next three years.

Most investors strongly felt that past barriers to the adoption have been rapidly falling away, as more firms have a greater internal capability to implement factor investing. Those investors interviewed also cited the availability of a larger number of factor products as reasoning for an increased factor allocation.

"Invesco has a 30 year history in factor investing in the U.S., with the factors most used by investors in North America, including Value, Size, Low Volatility and Momentum," continues de Martel. "The feedback from the Global Factor Investing Study offers Invesco an understanding the investor factor experience provides us with a foundation to create products and portfolios that align with their future intentions."

Invesco conducted the survey through face-to-face interviews with respondents in Q1 and Q2 2018. The full study seeks to capture the depth, color and context of the factor rationale of global investors.

About Invesco Ltd.
Invesco is an independent investment management firm dedicated to delivering an investment experience that helps people get more out of life. NYSE: IVZ; www.invesco.com.

Important Information

Sample and methodology
The fieldwork for this study was conducted by NMG Consulting's strategy consulting practice. Invesco chose to engage a specialist independent firm to ensure high quality objective results. Key components of the methodology include:

– A focus on the key decision makers within institutional investors, asset consultants, and private banks, conducting interviews using experienced consultants and offering market insights
– In-depth (typically one hour) face-to-face interviews using a structured questionnaire to ensure quantitative as well as qualitative analytics were collected
– Analysis capturing investment preferences as well as actual investment allocations with a bias toward actual allocations over stated preferences
– Results interpreted by NMG's strategy team with relevant consulting experience in the global asset management sector

In 2018, the third year of the study, we conducted interviews with 300 different asset consultants, insurers, pension funds, sovereign investors and private banks globally (up from 108 in 2017). In this year's study, all respondents were 'factor users', defined as any respondent investing in a factor product across their entire portfolio. We deliberately targeted a mix of investor profiles across multiple markets.

Survey participants experience may not be representative of others, nor does it guarantee the future performance or success of any product. The opinions expressed are those of Invesco and are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals. There may be material differences in the investment goals, liquidity needs, and investment horizons of individual and institutional investors.

All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment making decision. As with all investments there are associated inherent risks. This should not be considered a recommendation to purchase any investment product. This does not constitute a recommendation of any investment strategy for a particular investor. Investors should consult a financial professional before making any investment decisions if they are uncertain whether an investment is suitable for them. Please obtain and review all financial material carefully before investing.

Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities; it's an indirect, wholly owned subsidiary of Invesco Ltd.


1 Dating back to the founding of Invesco Quantitative Strategies in 1983, and over 15 years managing factor-based ETFs


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