Leading academic studies discovered that it is possible to identify distinct factors which can systematically generate higher risk-adjusted returns, furthermore they are expected to continue to be profitable in the long-term. Return anomalies are explained by a semi-efficient reaction to news which respectively causes an over- or under-reaction to the information.

The sources of outperformance are called factors and can be referred to styles such as value, momentum, growth, quality, etc. Strategic allocation towards several factors is called multi-factor investing.