We believe in creating quantitative stock investment strategies based on fundamental factors that historically have been associated with superior stock returns. Our strategies are supported by empirical research and decades of market data. By employing a systematic approach to investing we also seek to minimize the human cognitive and behavioral biases that typically lead to long-term investment under-performance.
We also seek to reduce investment risk in three ways. First, our quantitative stock investment strategies include defensive factors such as investing in high quality stocks that also possess low-to-moderate historical price volatility. Second, our risk managed stock and stock index trend-following strategies use proprietary trend-following hedges as a portfolio overlay. These tactical hedges are designed to reduce portfolio risk by moving all or a portion of the portfolio into defensive cash or fixed income investments when the current market environment suggests that the risk of owning stocks is high and keep the portfolio fully invested in the stock market when the risk of owning stocks is moderate to low. Lastly, we frequently combine various individual strategies into one portfolio in order to enhance overall diversification. Consequently, by (1) incorporating quality and low volatility defensive factors into our stock selection models, (2) applying custom tactical, trend-following hedges as a portfolio overlay and (3) combining multiple individual strategies into one portfolio, we are able to reduce portfolio risk and provide our clients with downside protection in the event of a major market decline.
By combining good “Offense” (i.e., factor-based stock selection) with good “Defense” (i.e., the use of defensive factors, proprietary tactical hedges and multi-strategy diversification) we believe that our strategies can provide our clients with superior absolute and risk-adjusted returns over multiple market environments compared to more traditional investment options.
