doesnt a factor based model include things like fundamentals and economic variables? You can take a position in an equity that tracks somewhat closely to a countrys gdp, but it won't be exact, similarly any fundamentals. So your model might give you a benchmark that is equal to 0.7*uk gdp growth + 0.5*ftse 100 retn + 0.1* uk employment growth, this might give you a benchmark return of 5% in a month, but you wouldn't be able to replicate this benchmark very easily, and any rep would have a massive tracking error as you cant invest directly at employment or gdp returns
The model-based may include positions that are unsuitable, irresposible, or impossible for a mgr to take.
For example:
As was said above the model may say to take a 50% position in a closely held stock, but if only 20% is available to the mkt there's no way a mgr could take this position (excluding leveraging it, but even that may be difficult for a security that's closely held)
Or the factor model may have a large short position included which would be irresponsible for a mgr to hold and possibly unsuitable under portfolio investment guidlines.