Three factor model
The Three Factor Model is a standard method of pricing assets in academia. It is not yet widely used in Investment management practice. Ferry Financial is at the forefront of Investment Management in adopting this model.
The Three Factor Model consists of three distinct factors:
- The Market Factor (equities v fixed income in the portfolio)
- The Size Factor (large company stocks v small company stocks in the portfolio)
- The Value Factor (value v growth stocks in the portfolio)
By structuring a Three Factor Model portfolio, Ferry Financial can capture unique dimensions of returns in the market without the need to stock pick, market time or base investments on past performance.
Our portfolios are the best choice for investors. Implementing our disciplined long-term investment strategy is not only sensible and logical, but it is cost effective to develop and maintain, making such an approach in your best interests.
The result is a portfolio that aims for a solid long-term rate of return whilst minimising expenses and taxes.
It is far better value, and less risky, to just ‘buy the market’ instead of buying a portfolio of individual stocks selected after fundamental research and analysis in the expectation that after costs they will consistently outperform the market average performance. One of the ways in which we will help you is by advising which markets and asset classes are appropriate for your investment portfolio.