Investment Philosophy

We believe that attractively valued, high quality stocks with positive momentum will outperform the broader equity market over the long term. Why? Financial markets are inefficient. This causes segments of the market to outperform or underperform for periods of time in ways that can be exploited by skilled managers.

The inefficiencies that we aim to exploit persist because they are often driven by behavioural biases that can remain in place for prolonged periods. Our evidence suggests that we can achieve consistent outperformance by investing in stocks with attractive style characteristics


Investment Process

We use a disciplined, bottom-up investment process to exploit persistent market inefficiencies that have arisen due to human behavioural biases. Evidence shows that sustainable outperformance can be achieved by systematically investing in stocks that are attractively valued, are high quality, and have positive momentum. Combining these three styles in a single portfolio further improves consistency of outperformance.

We apply a consistent and disciplined approach in researching and identifying these characteristics across a universe of approximately 2,000 pan-European stocks. The strategy takes long positions in stocks that satisfy our investment criteria, while taking short positions in stocks that are expensive, low quality and have weak momentum. The short positions also generate cash that can be used to increase its long positions, boosting the return potential of its long portfolio. This allows the team to commit more capital to the insights created by our proven investment process, while maintaining net market exposure at around 100%. The ability to offset some long active positions with short active positions allows the team to better control many of the incidental risks that active management creates, such as sector and country bets, as well as market cap and beta positions

The strategy is managed by our European Equity Group, Behavioural Finance Team, consisting of 44 European equity investment professionals based in London with an average of 15 years of experience. The strategy benefits from the team's common investment approach, which facilitates the flow of ideas across portfolios.