Why factor crowding fears are overblown

Factor investing has little impact on exposures, claims La Française Investment Solutions

The rush into factor investing strategies – today worth about $1 trillion – has raised concerns that alternative factors are becoming crowded, and therefore overpriced and more sensitive to dislocation events. Is this fear justified?

This article seeks to answer that question in relation to equity alternative premia, the best known and most popular premia. The arguments put forward are equally valid for premia in other asset classes.

We first return to fundamentals that underlie the existence

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