Proprietary Investment Strategies

Financial Trust’s Investment Strategies

Systematic, Disciplined Process

Financial markets are inherently uncertain. Having a systematic, evidence-based approach is essential in avoiding emotional decision making in volatile environments. No strategy can be expected to outperform at all times. However, we do believe that relying on rigorous, peer-reviewed research provides investors with the confidence needed to stick to their investment plan. 

Well Researched Style Factors

Our active approach to investment management leverages decades of academic research supporting the benefits of utilizing style factors in the investment process. Style factors are security characteristics, such as a stock’s price to sales ratio or return on equity, that help explain the difference in returns across assets. 

Enhanced Diversification

Diversifying across asset classes, factors, and securities is at the core of our investment philosophy. It is widely acknowledged that the benefits to diversification are greatest when correlations between assets are low. Factor analysis is a statistical method for describing the sources of investment return in a portfolio. We combine historically uncorrelated style factors with the goal of enhancing portfolio diversification.

Factor Categories

Our investment strategies generally use a combination of factors from some or all of the following categories:

  • Value – identifies stocks that have the lowest valuation multiples amongst peers.
  • Momentum – selects stocks that have had the best recent price performance.
  • Quality – identifies stocks that score the highest on metrics such as profitability, return on capital, and/or leverage ratios.
  • Earnings Growth – ranks stocks by the rate of growth in their earnings and sales results.

ValueMomentum Leaders™ Methodology

Our proprietary ValueMomentum Leaders™ methodology combines factors based on value and momentum. Value and momentum are unique in that these factors have historically had a negative correlation, which when combined, can magnify the risk reduction benefits of diversification. Our ValueMomentum Leaders™ approach is at the core of our security selection approach in a large portion of our strategies.

Quantamental Approach

While many of our strategies are purely quantitatively driven, we also have strategies that combine quantitative factor screens with trend-based technical analysis, fundamental analysis, and top-down macroeconomic research.

Risk Management Through Multi-Layered Asset Allocation