Humans are great at asking ‘Why?’ The danger of quantitative investing comes from not asking ‘Why?’ before acting. We’ve put a process in place to minimize that danger.
—Elena Khoziaeva, CFA, Head of US Equity
Research and design is the critical first step – and ongoing part of – a thoughtfully designed investment process
Minimizing Biases and Emotions
We seek to eliminate the biases and emotions that derail investment decision-making and impede long-term performance with an investment process that is straightforward, disciplined, statistical, and evidence based. This leads us to focus on several factors that are documented drivers of risk and return.
Our belief in factors as the building blocks of our investment process allows us to create portfolios that are grounded in years of academic research, but nimble enough to incorporate the latest in research to benefit our clients’ portfolios.
Humans AND (Not “Or”) Data
Qualify and incorporate high-quality data
Significant resources and specialized expertise in selecting and qualifying data ensure that inputs are of the highest quality. Ongoing incorporation and testing of new inputs provides up-to-date perspectives on various market conditions.
Evaluate fundamental factors that drive risk and return
Examine academic and financial theory for prospective factors and leverage internal experience and knowledge to identify prospective factors. Assess validity, persistence, and risk characteristics of each factor.
Examine relationship among factors to determine factor emphasis. Combine multiple variables to gain strong factor exposure and diversification. Establish buy, hold, and sell rules.
Construct and monitor portfolios
Determine weights and create portfolios with targeted risk-adjusted returns and portfolio characteristics that meet client needs. Incorporate multi-layer risk review in research and implementation.
We believe our competitive advantage comes from having conviction in our analysis that allows us to stick with our process and design even when challenged by market events in the short run. It’s because of the discipline that we can invest for the long run with confidence.