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Factor Tilts

Aperio implements factor strategies that are tax efficient, control risk, and minimize unintended bets.

Replicating and Creating Alpha-Seeking Strategies

Sophisticated investors no longer have to choose between passive and active strategies. For those who want more control over their risk exposure, Aperio’s Factor Tilts solutions replicate and create alpha-seeking strategies in separately managed accounts to provide the cost savings of indexing combined with tax efficiency.

Engineering Portfolios with Precise Risk Control

We construct a portfolio reflecting each client’s preferred trade-off between factor alpha and tax alpha. Clients can select from Aperio’s standard factor strategies or design custom factor tilts. We follow a disciplined yet flexible process that allows us to map the client’s investment strategy onto a multi-factor risk model that can include tilts toward factors, geographies, industries, or sectors. Aperio implements each client’s desired tilts with precise risk control, whether that be in terms of tracking error or total portfolio volatility.

Beta-1 strategies seek to outperform a benchmark by tilting toward factors with a moderate increase in tracking error (versus non-factor strategies). Lower-risk strategies seek to reduce total portfolio volatility while outperforming a benchmark on a risk-adjusted basis. They fit the description of 'forgoing some market upside in exchange for some downside protection.' The tracking error is higher than in beta-1 strategies.