Style Investing

The performance of certain ‘factors’ or ‘styles’ is well known and ‘value’, ‘momentum’ and ‘low volatility’ are just some of the characteristic groupings that investors are increasingly keen to exploit.

Our factor specialists are systematic in their approach. They refine raw style exposures into what we call ‘true styles’ – a methodology designed to better harness performance potential and enhance diversification benefits.

Today we offer a range of factor based solutions including regional, global and market neutral options.

Risk Disclaimer

The value of investments and any income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested.

Leveraging our proven capabilities in systematic investment strategies, the BMO AM Market Neutral Global Equity pooled fund offers investors the potential benefits of multiple style factors in a single portfolio.

Investing both long and short in global equities, the fund aims to deliver a positive absolute return over a three year period regardless of market conditions, and targets an annualized volatility of 10%.

Targeting “True Styles”

Style based investing, or grouping stocks by particular factors like value, momentum or low volatility, has been widely acknowledged to generate excess return potential, or “style premia”, independent of traditional asset classes.

Low Volatility

Low risk names outperform higher risk counterparts hampered by excessive borrowing and lottery effect.

Investing for absolute return: Long low-risk stocks and short high-risk stocks.

True size

Higher (diversifiable) risk of smaller companies leads to better returns of smaller companies as a group.

Investing for absolute return: Long small cap and short large cap stocks

True Momentum

Market fails to recognize importance of past trends – winners continuing to win and losers continuing to lose.

Investing for absolute return: Long stocks with good 12-month returns and short those with poor 12-month returns.

True Value

Excessive pessimism for prospects for cheap companies leads to higher returns.

Investing for absolute return: Long high and short low book to price stocks.

True GARP

Good growth, moderate valuations and quality financial statements – best of all worlds.

Investing for absolute return: Long high growth at a reasonable price (GARP) stocks and short low GARP names.

Hear from the Managers

Chris Childs

Director, Systematic Strategies

Chris Childs joined the company in 1993. He was a senior fund manager within the Multi-Strategy team before permanently transferring across to his current position as a Director within the Factor Investments team.

Chris is a graduate of the Bristol Business School and holds a Masters with distinction in Finance & Investment from Exeter University.

”In a world where equity valuations are stretched, and the outlook for fixed income is subdued, the need for a genuine alternative strategy – and a true portfolio diversifier – is clear”

Solutions

BMO AM Market Neutral Global Equity Fund

BMO Global Long/Short Equity Fund

Resources

Insights

Multi-Asset

Macro views

June 2022

June Monthly Market Commentary: The Economy to Face Increasing Chill, not a Hurricane

Expectations for Fed and Bank of Canada (BoC) tightening continue to firm up as monetary stimulus is getting removed at a quick pace to lean against excessive inflationary pressures. Rising rates should weigh on the growth outlook and equity valuation, but we do not expect a recession over the next 6 to 9 months.

Multi-Asset

Macro views

May 2022

May Monthly MAST Commentary: Rising commodity prices continue to support the inflation outlook while supply-chains are still exposed to disruptions

Monetary stimulus from the U.S. Federal Reserve (the “Fed”) and Bank of Canada (BoC) is getting removed at a quick pace to lean against excessive inflationary pressures. Rising rates should weigh on the growth outlook and equity valuation, but we do not expect a recession over the next 12 months.

Multi-Asset

Macro views

April 2022

April Monthly MAST Commentary: Fear of War is Coming Down, but Fear Over the Fed’s Soft-landing is Rising

The conflict in Ukraine keeps on raging, but fear of an escalation has come down. However, the impact on commodity prices will continue as prices remain elevated and long-term supply remains an issue, most notably for Europe and other commodity importing countries.

April 2022

Value Hunting: The Return of Cautious Optimism

With macroeconomic data telling two different stories—one of low unemployment and robust earnings, another of high inflation and rising interest rates—Luke Casey of Pyrford International provides an inside look at the investing factor that’s making a surprise comeback: Value.

April 2022

A Portfolio Manager’s Guide to War and Conflict

With Russia’s recent invasion of Ukraine, institutional investors are once again questioning the historical relationship between war and capital markets.

April 2022

Riding the $100T Renewables Infrastructure Wave

Joe Idaszak, Portfolio Manager, Brookfield Public Securities Group (PSG) offers his take on why institutional investors interested in the “E” of ESG should consider investing in the one specific area with $100 trillion of global investments expected by 2050: renewables infrastructure.