Over the past 20-odd years, many investors have started expanding their portfolios into alternative asset classes, such as hedge funds and commodities, in order to improve diversification. However, the past decade has seen a significant part of the purported correlation benefits turn out to be misleading, or at least absent when most needed.

Exacerbating this is the fact expected returns on the two main return drivers of most portfolios – equity and bond markets – are also now at seemingly historical lows. 

Factor-based strategies are there to help. Factor strategies are proven, systematic strategies, based on a clear economic rationale, that show persistent superior risk-adjusted returns across markets and over long…