Distinctive fundamental overlay is a key risk management tool
A crucial component of the investment process is the team’s fundamentally based ‘Expectations at Risk’ ([email protected]
) overlay. This integral component of the investment process is designed to mitigate risks that traditional quantitative strategies tend to ignore. The common pitfalls of quantitative investing include being caught by ‘value traps’ and in ‘crowded’ momentum trades. [email protected]
identifies the key drivers of a stock’s future earnings and assesses likely earnings outcomes for each stock. This helps us quantify the likely upside/downside risk in a stock’s potential earnings, as well as the level of dispersion in possible earnings outcomes.