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Factor Investing

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How factor investing can help drive better returns

Investors often express their views on markets by tilting their portfolios towards certain sectors, in the hope of generating excess returns. Factor investing is a more sophisticated tool that can help to achieve better results.

Finding your investment niche

Charlie Munger is famous for applying different 'mental models' to get an edge in markets. In this vain, here's a look at how ecological niches can be applied to stock markets and may help you become a better investor.

How ‘less pain, some gain’ can smooth your volatile ride

As markets whipsaw, the risk that volatility might undermine investors’ ability to achieve their return objectives looms large. What can investors do to mitigate that risk and avoid falling short of their goals?

Investing across deflation, inflation and stagflation

Real returns on equities and multi-asset portfolios are typically poor when inflation is high, especially in times of stagflation. Factor returns, on the other hand, are relatively insensitive to inflation cycles.

Portfolio composition and what you find under the bonnet

Powerful structural themes such as technology disruption and demographic changes may disguise what is driving company success. Watch these broad categories as they may not apply in ways you expect.

'Quality' ETFs under the microscope

Interest in 'quality' factor ETFs has increased this year, helped by very attractive returns. However, not all ETFs are created alike and there are divergences in portfolio traits which investors can identify.

Is currency exposure an unwanted risk or source of returns?

  As more Australians invest overseas, currency exposure represents a new risk. 50% hedged, 50% unhedged was once a popular ‘least regret’ approach, but there's a move to currency as a return source.

Five principles from the lost decade of value investing

Value investing is a long-cycle play, but a decade (and counting) of waiting for mean reversion has tested the faith of even long-horizon investors. Some basic principles are worth assessing.

Why good investing is like a healthy diet

It's the underlying nutrients in the foods we eat which determine if we have a healthy diet. Similarly, the underlying factors that affect our assets determine if we have a healthy portfolio.

Careful what you wish for chasing franking

While franking credits attached to Australian equity dividends can be a meaningful source of extra returns, a deliberate tilt towards franking can also introduce significant unwanted risks into the portfolio.

Identifying value for money in active management

Many active managers are closet indexers. The real cost of forcing a skilled manager into a low tracking error is the limit to the upside.

Retail investors can invest like institutions

Investment solutions that were once only available to the big end of town are now available to anyone willing to learn the same lessons, research the available products and try some new approaches.

Most viewed in recent weeks

Simple maths says the AI investment boom ends badly

This AI cycle feels less like a revolution and more like a rerun. Just like fibre in 2000, shale in 2014, and cannabis in 2019, the technology or product is real but the capital cycle will be brutal. Investors beware.

Why we should follow Canada and cut migration

An explosion in low-skilled migration to Australia has depressed wages, killed productivity, and cut rental vacancy rates to near decades-lows. It’s time both sides of politics addressed the issue.

Are LICs licked?

LICs are continuing to struggle with large discounts and frustrated investors are wondering whether it’s worth holding onto them. This explains why the next 6-12 months will be make or break for many LICs.

Australian house price speculators: What were you thinking?

Australian housing’s 50-year boom was driven by falling rates and rising borrowing power — not rent or yield. With those drivers exhausted, future returns must reconcile with economic fundamentals. Are we ready?

Retirement income expectations hit new highs

Younger Australians think they’ll need $100k a year in retirement - nearly double what current retirees spend. Expectations are rising fast, but are they realistic or just another case of lifestyle inflation?

Welcome to Firstlinks Edition 627 with weekend update

This week, I got the news that my mother has dementia. It came shortly after my father received the same diagnosis. This is a meditation on getting old and my regrets in not getting my parents’ affairs in order sooner.

  • 4 September 2025

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