so i thought I knew this concept, but seems not.
-
In the curriculum, it says that passive factor-based equity strategies involve taking active decisions. Like what kind of active decisions? when I see the word passive factor-based, i think of the factor exposure being the same as the benchmark we are replicating. isn’t that the case?
-
It says that passive factor based equity tends to concentrate rissk exposure compared to market cap weighted, but what I don’t get is- like if you have exposure to many factors, how does that concentrate risk exposures? Also for me, it feels that market cap weighted is based solely on one risk which is the size since we talk about market cap.
-
Passive factor exposure vs conventional active management - so they say that the active decisions for passive factors are taken before rather continuously. Like what does it even mean?