Revisiting The Factor Zoo: Exploring Investment Factors and Time Horizon
Understanding Investment Factors Over Time Horizon
In the investment landscape, time horizon plays a pivotal role in determining the effectiveness of different investment factors. This article revisits the factor zoo, examining how the optimal allocations for factors such as size, value, momentum, liquidity, profitability, and investment fluctuate based on varying investment horizons. By analyzing these six factors, investors can refine their strategies to align with specific time frames.
Key Investment Factors Analyzed
- Size: Evaluates company size effects on returns.
- Value: Investigates undervalued securities opportunities.
- Momentum: Assesses price trend persistence.
- Liquidity: Focuses on asset transaction ease.
- Profitability: Analyzes returns on equity.
- Investment: Looks at reinvestment effects on returns.
Investment strategies should appropriately reflect these dynamics, facilitating better performance over different periods.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.