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.
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.
Our style premia approach systematically accesses the returns of five proven investment styles
We target a combination of styles proven by academic research to provide positive returns.
We believe these styles are an effective way to systematically capture excess returns available in equity markets.
Styles we target
Growth at a Reasonable Price (GARP) refers to stocks with good growth, moderate valuations and good quality financial statements represent ‘the best of all worlds’.
Low Volatility is aversion to leverage and the ‘lottery effect’ lead to low-risk stocks performing better than expected under traditional finance theory.
Under reaction to news and extrapolation of past trends lead to past winners continuing to win and past losers continuing to lose.
Excessive pessimism about the prospects of ‘dull’ companies and optimism about ‘glamour’ companies leads to mispricing.
Higher (diversifiable) risk of smaller companies leads to better returns of smaller companies as a group.
Our True Styles Approach
Our ‘True Styles’ process aims to improve long-term returns with a lower correlation between styles.
These ‘raw styles’ can be driven by shared components, however we seek exposure to the aforementioned pure style, using systematic filters to identify ‘True Styles’.
The ‘True Styles’ approach also reduces unwanted volatility from the individual styles – the target result is enhanced risk adjusted returns and the creation of attractive portfolio components.