Process

When assessing a money manager’s performance, how do you distinguish skill from luck?

We believe that stock picking and relying on a manager’s “gut instinct” can make it difficult to achieve the consistent alpha that we are seeking. We prefer a more scientific approach. So we crafted a quantitative investment process that can be consistently applied. But we also understand the human element that is critical to a successful process. Our investment team relentlessly measures and analyzes the source of our return so that necessary adjustments can be made.

Our investment process is:

1. Quantitative: Removes personal biases from portfolio construction

2. Behavioral: Uses behavioral finance to study investor behavior and seek mispriced securities

3. Transparent: We are not a “black box.” We believe that it is important to be able to demonstrate your method of security selection and the source of your returns.

4. Repeatable: We can apply our approach to any benchmark, regardless of its style.

5. Consistent: Because our strategy is quantitative, our clients know that we will apply the same process over time, and yet closely monitor it for improvements.

Our goal: More consistent excess returns over time.

We would be happy to provide more detail about our investment process. You can reach us by calling 888.832.3863.

Risk Management

In today’s financial markets, managing risk is as important as ever. Some money managers focus only on achieving high returns without regard to the risk being taken to achieve those returns. We believe that by closely managing risk along with returns we have a better chance of providing the consistent alpha we are seeking.

This is why our portfolio construction methods incorporate rigorous risk management. Our strategies are benchmark-aware and seek to maximize information ratio.

How do we manage risk? We carefully measure and manage risk characteristics similar to the benchmark of a strategy. We don’t get caught up in sector forecasting and trends. Instead we diversify across sectors and select what we believe to be the best stocks within those sectors.

Source of Return

We are seeking good investments, not just good companies.

A money manager should provide excess return by seeking out mispriced securities. We know that investor behavior drives this mispricing and that it is persistent. Which is why our process is rooted in behavioral finance.

Behavioral finance studies how psychology affects financial decision making and the financial markets. By analyzing investors’ reactions to information, we can seek out these mispricings in our effort to provide alpha.

Performance Attribution
We believe that understanding the source of our return increases our chances of repeating success. That’s why we built an investment process that allows us to measure and statistically demonstrate the source of our return. Each quarter we provide our clients with a detailed attribution report.

More Info
How do we seek out overlooked opportunities in the market? Learn more about how we use behavioral finance in our research section.