what are factor tilts and how can they improve portfolio returns
Factor tilts refer to the practice of tilting a portfolio towards specific factors that have been shown to provide a risk premium, such as value, momentum, quality, low-volatility, and size.
These factors can be captured cheaply through smart-beta funds, and tilting towards them can improve the risk-adjusted return of the equity sleeve. The key is to identify factors that are not already represented in the portfolio's liability or other holdings, and to tilt towards those factors to enhance returns.
From the full lesson: Equities at Level III
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