As an average retail investor, let’s assume that we are convinced that passive investing is the most optimal investing strategy for us. Concept-wise, it is simple and easy to execute – just buy a ETF or low cost index fund. The results are also more reliable – you will gain slightly less than the market returns minus the cost.

But does it mean that by choosing the path of passive investing, we resign our fate and accept whatever the market bestows upon us? Not necessarily.

One strategy that has gained popularity recently propelled by latest research on financial markets, popularity of ETFs and movement towards low cost passive investing.

What is that strategy? Factor investing.

In factor investing, there has been quantifiable research that supports the concept that holding stocks with certain characteristics (a.k.a risk factors), provides higher returns than the market in the long term.

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