MSCI launches factor classification programme in move to unwrap smart beta

Demand for factors increasing

Index provider MSCI has launched a factor classification programme in an attempt to "demystify" smart beta and bring a standard framework to the market.

The move will enable investors to implement and measure factor strategies while providing them with a common language framework. MSCI FaCS will act as the framework for evaluating, implementing and reporting factor allocations and will be based on factors that have historically driven performance. It includes eight factor groups and 16 factors from across 70,000 global securities. Industry focus on fees will continue to drive smart-beta inflows The classification can be viewed at either the security level for stock selection or at the fund level so investors can compare factor expo...