Central banks turn to factor investing for reserve management
Lack of capabilities may hamper effective use of factor analysis, officials say
Central banks are starting to use “factor investing” techniques to manage reserves, but need to improve their in-house capabilities to do so effectively, according to officials at Central Banking’s National Asset-Liability Management conference in Mexico City on May 23.
Factor investing measures quantifiable factors accounting for differences in portfolio returns, unlike more traditional asset management techniques, which target assets instead.
“We are studying factor [analysis] as a
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