Investments

Building Equity Portfolios with Style

Much has been written recently about 'smart beta,' 'advanced beta,' 'intelligent indexing,' and various other buzzwords — broad terms that are not always well-defined. Looking beneath these catchy titles, Mercer believes that it is important to focus on the underlying drivers of return and how this can help investors with constructing and monitoring their portfolios. We have been helping clients implement equity structures with explicit allocations to style factors for many years. This short paper serves as a primer on approaches to capturing a range of return drivers in global equity portfolios.


To which return drivers should investors seek exposure?

The simple answer is that investors should seek exposure to those drivers of return that they believe will outperform (either in absolute or risk-adjusted terms) over the long term. So, which drivers are likely to outperform? This is, of course, a vexed question on which commentators, market practitioners, and academics will not always agree. At Mercer, we are wary of claims that certain return drivers are 'academically proven' to outperform ('proven' is a dangerous word to use in the investment industry, particularly in relation to the future). Nevertheless, there is evidence — both empirical and economic rationale — that can be used to assess whether a given return driver is likely to outperform in the future.

Mercer believes that investors should consider a positive bias toward the drivers of value, size, momentum, low volatility, and profitability

 Fill out the form below to view the ‘Building Equity Portfolios with Style' white paper

Thank you for your interest in  ‘Building Equity Portfolios with Style'. If you do not have your pop-up blocker enabled, you will be prompted by your browser to download the article or to view it in a new window. In addition, you will receive an email from Mercer shortly with a link to access the PDF.

Please provide your details below.
*Required Fields
First name is required
Last name is required
Role is required
Email is required Email is invalid
Company name is required
Country is required

I would like to receive communications about products and offerings from Mercer. I understand that I can unsubscribe at any time.

By clicking Submit, I agree to the use of my personal information according to the Mercer Privacy Statement. I understand that my personal information may be transferred for processing outside my country of residence, where standards of data protection may be different.

There are some errors processing this form. Please check the fields and try again.

Thank you for Submitting. We will get back to you shortly.