Scientific Beta

Financial News: "Eric Shirbini, global product specialist at ERI Scientific Beta, said the primary benefit of multi-factor ETFs is to reduce and control risk because they tend to have lower tracking errors and, because they are more diversified, they are more likely to produce better results."

Financial News 19/02/2016

"(...) Eric Shirbini, global product specialist at ERI Scientific Beta, said the primary benefit of multi-factor ETFs is to reduce and control risk because they tend to have lower tracking errors and, because they are more diversified, they are more likely to produce better results. He added: “With lower relative drawdowns, multi-factor ETFs recover much quicker than single-factor ETFs and have better performance across different market conditions.” (...) A downside for long-term investors is that a multi-factor index provides similar returns as the single factor index over the long run, according to Shirbini. “For example, by investing 25% each in four factors, an investor will capture 25% of each factor risk premium. If the risk premiums are approximately the same then there isn't much benefit in terms of return,” he said. (...)"