What is factor investing, and is it worth the extra complexity?

Factor investing tilts a portfolio toward characteristics that academic research links to higher long-term returns, such as value (cheap stocks), size (small companies), momentum, quality, and low volatility. The idea is that these factors have historically earned a premium over the broad market. The catch is that any single factor can underperform for a decade or more, factor funds charge higher fees than plain index funds, and disciplined patience is required to capture the premium that may not appear on your timeline. For most investors, a simple low-cost total-market index fund captures the market return without the added cost or the risk of picking a factor that lags for years. Only tilt toward factors if you understand and can stomach long stretches of underperformance.