Equity funds for long-term investors face short-term turmoil

While some Nordic asset managers' global multi-factor equity funds have performed significantly worse than the overall market in 2020, the results are mixed relative to a global multi-factor risk premia benchmark. These funds' commercial breakthrough still seems to be an open question, though.

Photo: Colourbox

Between 2008 and 2018, the number of multi-factor funds mushroomed from 37 to 440 globally, according to Morningstar.

One of the reasons for this growth was an analysis of the Norwegian oil fund’s equity strategy, where Columbia Business School Professor Andrew Ang and two co-authors found that a significant component the oil fund's underperformance in 2007-2008 could be explained by exposure to "systematic factors which fared very poorly during the financial crisis".

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