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Research and White Paper

Factor Investing in European offices

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Factor investing is an investment approach successfully used in fixed income and equity investment management. It is based on academic work by Fama & French (1993) among many others. The approach identifies multiple factors that explain excess returns compared to the market portfolio. Initially these factors focused on small caps, value and growth stocks, but then expanded in scope. By identifying the most relevant underlying factors, investors can benefit from market inefficiencies in a rules-based and transparent way. If you consistently select stocks, bonds or sectors whose performance have been driven most by factors delivering excess return, you should beat the market benchmark in the long term. These so-called smart beta strategies use factors such as volatility, liquidity, quality, value, yield and growth. In this report, we apply this factor investing approach to close to 40 European office markets for the first time. We will also compare factor investing to the traditional core and value add investment styles.

CATEGORIES: ASSET CLASSES Asset Classes: Real Estate