Read: CAP member outcomes increasing amid stronger markets: report

A factor is a specific characteristic that has historically helped explain why some stocks outperform others. Common factors include value (companies trading at lower valuations compared to fundamentals), momentum (stocks with strong recent performance), quality (profitable companies with strong financial health) and size (companies with lower market-cap that exhibit different risk-return characteristics). Rather than focusing solely on industries or regions, factor investing seeks to identify these underlying drivers of returns.

While many investors think they’re diversified by owning both value and growth funds, those strategies often carry…