Factor weighting based indices weight constituent stocks based on market risk factors of stocks as measured in the context of factor models, such as the Fama–French three-factor model. These indices Common factors include Growth, Value, Size, Yield, Momentum, Quality, and Volatility. Passive factor investing strategies are sometimes known as "smart beta" strategies. Investors could use factor investment strategies or portfolios to complement a market-cap weighted indexed portfolio by tilting or changing their portfolio exposure to certain factors.
