Since not all factors-a characteristic or trait of a stock-do poorly or well at the same time,
combining different ones into a portfolio can smooth out returns.
Almost 90% of the risk for a 60% stock/40% bond allocation is caused by the equity allocation.
The equity allocation, and its risk, can be reduced without sacrificing expected returns
if factors are used instead of a market-like portfolio.
Getting exposure to a factor's return premium does not require short-selling certain stocks;
an investor simply needs to have more exposure to a given factor than the market does.
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