Factors are broad, persistent drivers of returns that have been proven to add value to portfolios over decades, in accordance to research data from Dartmouth College . Factor strategies like smart beta capitalize on today's advancements in data and technology to give all investors access to time-tested investment ideas, once only accessible to large institutions. As factor strategies continue to gather attention, some misconceptions have arisen. I am highlighting-and clearing up-a few here today.

1. Factor strategies are stocks-only.

fixed income factors

2. Factor investing is unnecessary because my portfolio of stocks, bonds, commodities, hedge funds and real estate is well diversified.

3. Factor investing is a passive investment strategy.

online resources Sara Shores is Global Head of Smart Beta for BlackRock and a regular contributor to The Blog .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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