Size factor - how to "overweight"?

CFA Level III
#1

Hi all

A quick question that is getting me confused. When you overweight the size factor stocks compared to a benchmark. Does it mean that you are buying more Highly capitalized or is it the opposite?

The source of the confusion comes from the fama and french model where the beta for size is multiplied by SMB (Small minus Big).

The same question for the value factor: when you overweight it it means you buy more value stock, right? But here i have less confusion because in the fama and french it is HML (High minus Low).

Many thanks

#2

You’re buying more small cap stocks, raising your size beta.

#3

Thanks Saura.

So in line with the fama french model.

#4

Yeah