For Factor Investors, It Pays to Go Small
Factor investing tends to work the best among the smallest stocks.
A version of this August 2017 Morningstar ETFInvestor article appeared on Morningstar.com on Dec. 6, 2017. Download a complimentary copy of ETFInvestor here.
Tilting toward small-cap stocks alone isn't a great way to improve long-term performance. Small-cap stocks have historically offered a small edge over their larger counterparts, but that slight return advantage hasn't been much compensation for their higher risk and decade-long stretches of underperformance.
Alex Bryan has a position in the following securities mentioned above: XSLV, VBR. Find out about Morningstar’s editorial policies.