fama and french three factor model means: Eugene Fama, Kenneth French and Kenneth French created this model to show the expected return on a portfolio. The model incorporates beta, the market exposure in Capital Asset Pricing Model. It also includes two risk factors: HML High Minus Low and SMB Small Minus Big. SMB is responsible for higher returns for firms that have smaller market capitalizations, and HML is responsible for higher stock values at firms with higher Book to Market ratios. (in Stock Market Dictionary)