Issue link: https://resources.envestnet.com/i/1540867
56 What Is A Factor, Anyway? Factors represent distinct, mathematically derived sources of risk for securities. Regression analysis is typically used to identify and define factors. Investors seek risk factors that have consistently offered a return premium over time. In short, if the factor yields a better risk/reward relationship than the market over the long-term, it could be attractive to strategically bias a portfolio toward it. Throughout our presentation, we'll discuss this type of factor. Factor premiums can be ephemeral—the publication of an academic paper on a novel factor often results in the factor's deterioration. The investment community's rush to exploit the new factor can eliminate its usefulness. © 2025 Envestnet, Inc. All rights reserved. For one-on-one use with a client's financial advisor only. 20251017-4912642