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Factor Investing in Financials, Real Estate & MLPs

Do Unique Sectors Offer Attractive Alpha Opportunities?

Nicolas Rabener
10 min read
18 Feb 2019

SUMMARY

  • Beating benchmarks is challenging for fund managers, even in unique sectors
  • Factor performance in financials, REITs, and MLPs is comparable to the cross-sector factor returns
  • Classic factor investing strategies are likely more attractive than industry expertise

INTRODUCTION

Stating that active managers have a performance problem would be a slight understatement, especially if the benchmark is a large liquid index like the S&P 500. The SPIVA scorecard from S&P Dow Jones highlights that U.S. large cap equity fund managers dramatically underperform their benchmarks, regardless over which time frame this is measured.

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