Portfolio Risk & Return

Factor Exposure

How much a portfolio leans on the broad forces that drive many stocks at once, rather than on any one company. The biggest is the market itself, measured by beta. Others that researchers track include company size (small versus large), cheap versus expensive stocks, recent winners versus recent losers, company quality and sensitivity to interest rates. Two portfolios with entirely different holdings can share the same factor exposures, and so tend to rise and fall together; knowing them explains where a portfolio’s returns are really coming from. Not to be confused with the six factors of the Meridian Score, which grade individual stocks.

Educational information, not investment advice. See it applied across the screener →