We use a dynamic multi-factor equity approach to select stocks we expect to outperform the global equity market.
Factor investing is based on the premise that a significant portion of returns over time can be explained by the excess return generated by stocks that reflect certain characteristics, or risk factors.
We rank each stock in the investible universe for the strategy on five key criteria, or factors: value, quality, momentum, volatility and size. These rankings are then combined to provide a single score for each stock. Stocks with high scores are candidates for investment.
The weighting we allocate to each factor in the process of arriving at the single score reflects our view of the prevailing market conditions.
Factor investing is a well-established practice and supported by large bodies of academic research. It is cost-effective, with the potential to achieve excess returns. By combining factors, we mitigate the risk of any single factor being out of favour at a given time.