Factor timing: scant upside, big downside

Stock selection trounces “tempting” factor timing in study

Stock up and down

Factor timing, which has intrigued asset managers for decades, landed squarely behind stock selection as a source of high-wattage returns in a recent AllianceBernstein study.

The process – where managers try to dynamically adjust allocations to factors such as value, growth and momentum over time – underperformed funds using other strategies. In the study, stock selection dominated: 45% of the excess returns at a typical manager came from stock selection; 30% from tactical timing; and 25% from

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