Factor investing has gained serious traction in last several years; in fact, it's estimated that $1 trillion is invested in sector strategies and funds. And according to S&P Dow Jones, the second quarter showed some surprising hits and misses when looking at the factor indexes.
According to its latest index dashboard, S&P Dow Jones showed the top performing factor indexes — and those outperforming the S&P 500 benchmark — for the second quarter to be the S&P 500 High Dividend (5.35%), S&P 500 Momentum (5.29%), S&P Growth (5.25%), S&P 500 Low Volatility High Dividend (5.12%) and S&P 500 Pure Growth (4.71%).
Other factors, such as Equal Weight and Minimum Volatility were positive but behind the S&P 500, which was up 3.43% in the second quarter. The only S&P factor index that lost in the second quarter was the High Momentum Value, which was down 1.44%.
The report stated that "although faltering somewhat at the end of the quarter, momentum continued to outperform the U.S. large-caps." Further, it states than since the start of 2017, the momentum index has outperformed the S&P 500 index by 15% in total return, "a figure that has rarely been exceeded historically and, when it has been exceeded, has tended to predict a subsequent period of weakness for the strategy."
