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Research says "ESG is not a factor"

A factor is a stock characteristic associated with a long-term risk-adjusted return premium. Factors include "Value" or "Momentum". They are investment characteristics that have been found over time to contribute alpha to a portfolio. Recently we have seen ESG funds outperform, so can we consider ESG a "Factor"? This very interesting article by Research Affiliates says the answer is no, but that ESG will continue to be a very important theme.



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