Risk Factors as Building Blocks for Portfolio Diversification

The Callan Investment Institute explores portfolio construction using risk factors in its latest paper. The research finds that while building purely factor-based portfolios is challenging and largely impractical for most asset owners, using factors to understand traditionally constructed portfolios can be very useful.

The paper, from the research arm of Callan Associates, looks at ways that key elements of factor-based methodologies can be integrated in multiple ways into traditional asset-allocation structures to enhance portfolio construction, illuminate sources of risk and inform manager structure.

Click on the title to read Risk Factors as Building Blocks for Portfolio Diversification.