O que é Fundamental, statistical and hybrid factor models; factor exposure, factor return, specific return?

In a fundamental factor model the factor exposures are observed characteristics of each stock (industry membership, standardised style scores) and the factor returns are estimated each period by cross-sectional regression. In a statistical factor model both are estimated from the returns alone, by principal components or factor analysis. A hybrid factor model adds statistical factors to a fundamental model to capture what its characteristics miss. The specific return is what the factors leave: the regression residual. (A third family, macroeconomic models, observes factor returns such as inflation or the term spread and estimates exposures by time-series regression.)