Factor ETFs Fail to Deliver Their Promised Outsize Returns

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The premise of isolating a particular investment trait to outperform the market may have seemed like a good idea, but the data say something else

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.Investors who choose to ride the exotic investments known as factor ETFs are likely to be disappointed, the evidence shows.

Factor ETFs arrived in the past decade as another way to invest in particular subclasses of stocks and receive risk-adjusted, benchmark-beating performance over the long run. As it turns out, they appear to lack the X factor.The Trump-era tax cuts will phase out at the end of 2025 unless they are extended. Financial advisers say now is the time for retirees—and near retirees—to start planning for that.This copy is for your personal, non-commercial use only.

 

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