“Diversification is an established tenet of conservative investment.”
~ Benjamin Graham, The Intelligent Investor
What is factor investing?
There is more than to investing than just value or growth styles.
Here are some key investment “factors” and what they mean:
- Quality: Financially healthy companies with strong earnings power
- Value: Companies whose shares are relatively inexpensive
- Dividend: Businesses that have consistently increased their dividends
- Momentum: Stocks with rising price trends and improving fundamentals
- Small Cap: Stocks in newer businesses that have much growth ahead of them
- Low Volatility: Companies whose businesses and cash-flows are more stable
While none of these factors work all the time, they all have historically generated excess returns compared to the broad markets over the long term.
As you can see, Value and Momentum ranked the most effective:
Some strategies have performed better than others.
No strategy works all the time.
Combining various factors may better diversify your portfolio.
See the recent results of three styles: Momentum, Growth and Value over 1 year:
- Momentum lost strong early returns and is now flat
- Growth is in negative territory
- Value is now leading
Someone who only has “growth” investments could lack some style diversification.
Source: Goldman Sachs. Data from 9/15/2025 to 9/14/2026.
Therefore, a multi-factor approach can also smooth out your investment experience.
One way our “pension-style” portfolios diversify your investments is by style factors.
Call us for more information!
Your CommonWealth Team
