Investment Process

Proven Investment Process

Our proven quantamental process is a disciplined, high-conviction arbitrage of market inefficiencies. Quantitative screening and fundamental analysis are combined to constantly monitor and rank a large universe. Our rules and risk-based portfolio construction is focused on managing the unknown/un-owned, avoiding excess concentration and building portfolios that capture opportunities across a constantly evolving market universe.

In essence, this is how our team's investment acumen has developed over multi-decade careers. It is how we see the world put into a risk matrix designed to find Alpha when others can't. We are able to populate a portfolio risk-reward matrix across multiple dimensions--sector, region, currency, theme, and ESG. Fundamental research works with our quantitative analysis in developing conviction for portfolio inclusion and exclusion. The seasoned judgement of the investment team helps to contextualize, interpret and validate both fundamental and quantitative rankings.

 

Our Beliefs

The dual mandate of stewardship and returns are not incompatible. Our process ensures we are true to our values and client-focused mission. At Promethos Capital these objectives are not mutually exclusive.

 

Portfolio Features and Characteristics

  • High active share in excess of 90%
    While broadly diversified, portfolio holdings are concentrated in sizeable positions in companies we believe capture favorable risk-reward opportunities that reflect the stated values of the strategy.
  • Turnover <40%
    By doing significant fundamental research and due-diligence before investing, our goal is to find and maintain positions that can deliver on the values and performance goals of the strategy over extended periods of time, and therefore cut down on unnecessary and costly turnover.
  • Beta=1, low standard deviation, and reasonable tracking error of 3%-5%
    Our process is built around risk management and avoiding unintended risk. We focus on achieving returns from choosing the right securities that reflect the stated values of the strategy using risk-aware and risk-managed construction while mitigating market and concentration risk.
  • ESG is part of our DNA and integrated into all portfolios
    By including ESG criteria in the screening as well as fundamental evaluation of securities considered for all Promethos portfolios, all Promethos Capital’s Strategies are consistent with the principles and criteria associated with socially responsible investing, also known as environmental, social and governance ("ESG") investing.

 

Discipline Within the Process

Investment Process GoalsAdvantageHow
Avoid Alpha MyopiaManage and Mitigate BiasSystematic process to identify risks and opportunities, combined with disciplined buy/sell requirements
Capture Breadth of Market OpportunityObjective relative rankingQuantitative model tracking large universe of securities and ranking relative to sector, region and overall market
Take advantage of market inefficiencyFind arbitrage opportunitiesIdentify constantly changing opportunities in market complexity, investor sentiment and reactions
Evolve with Market BackdropAdapt to dynamic markets and rotationsSystematic market regime identification model senses and reacts to changes in market drivers by adaptive factor re-weighting and re-ranking
Constant LearningDiscover new opportunitiesProcess is sensitive to rapid evolution of industries and companies that create alpha opportunities

Contact Phone

(617) 535-9240

Promethos Capital

BOSTON/NEW YORK/TORONTO