Strategies

Our A. Stotz Investment Research (ASIR) investment universes can be customized to include or exclude certain markets depending on your needs, access to execution, and strategy. We offer a range from a Global universe to single country or regional universes.

We aim to achieve long-term capital appreciation through an actively managed portfolio of stocks. The fund strives to deliver a long-term return above similar passive indexes. We seek to achieve this through our unique FVMR stock selection methodology, our concentrated portfolios of only 15-20 companies, and our stop-loss discipline.

Global FVMR
Asia FVMR
ASEAN FVMR
China A FVMR
What our partners get

  • A ready-to-invest portfolio that is simple to execute and easy to monitor
     

  • Fundamental research on each company in the portfolio for investment committee approval
     

  • Daily monitoring of the portfolio and communication with your fund managers/traders
     

  • A truly active strategy on an attractive universe available today

Investment strategy

 

The ASIR systematic investment process has a fundamental and quantitative approach. Our quantitative analysis allows us to analyze enormous amounts of data on a universe consisting of thousands of stocks, and through our fundamental analysis, we dig deeper into each business’ value drivers. Our proprietary FVMR (Fundamentals, Valuation, Momentum, and Risk) framework considers the relative attractiveness of each stock in every portfolio revision considering:

  • Fundamentals – A bottom-up analysis of the companies’ operational, financial performance and competitive position

  • Valuation – Absolute and relative valuation of companies to determine if a stock is undervalued or overvalued relative to the investment universe

  • Momentum – Focus on earnings and stock price direction which helps to indicate the likelihood of price movement in a specific direction

  • Risk – Consideration of various risk measures such as volatility relative to the universe and fundamental risk factors such as debt levels
     

In addition to these primary factors, our methodology also evaluates economic and political risks and trends within the market as well as factors related to economic growth, exchange rates, and inflation.

Of course, by concentrating the portfolio to 15-20 stocks, we take on a higher amount of company-specific risk, but this is done to achieve a better chance of outperformance. We review, re-evaluate, and re-balance the portfolio holdings periodically throughout the year. ASIR also tracks each holding daily to be able to act in between these rebalance periods if market conditions require it.

Risk management

 

If a stock is performing poorly due to company events, country-specific risk, or general market sentiment, we may execute a stop-loss and hold a cash position. The strategies apply
predetermined stop-loss points for each stock to reduce downside risk; this is especially important due to the concentrated nature of our portfolios. Also, the strategies hold the cash from such sales until the next rebalance period, rather than attempting to reallocate that cash to other stocks at that time.

We may take temporary defensive positions through stop-losses that could cause cash levels to be high for a brief period due to adverse market, political or economic conditions. Under such situations, the strategies may hold a substantial portion of its Net Asset Value (NAV) in liquid assets.

FVMR Methodology and turnover

 

ASIR FVMR Methodology re-evaluates all stocks in a market regularly. At that time, we consider the attractiveness of all stocks in the universe and then consider changes in our portfolio. Our experience has shown that our portfolio has an annual turnover rate of 100-400%. Meaning, we could replace ten stocks out of a portfolio of 20 stocks, and in the most extreme case, all stocks could be replaced by 20 different stocks.

 

The turnover in the portfolio happens when the stocks are re-selected and re-balanced to equal weight. In between these periods, there are minimal transactions. Hence the trading aspect of the FVMR strategy could be defined as high turnover and low frequency of trading.

Definitions: ASIR model and actual portfolios

 

Backtesting – We usually carry out backtesting over periods of ten years. The charts for individual portfolios show the backtesting return of the past five years to reduce the compounding effect on the terminal wealth that longer time periods present. All ASIR FVMR Model portfolio returns, backtested and published, do not consider any fees (management fee, execution costs, foreign exchange costs, etc.).

ASIR FVMR Model portfolio – These are portfolios of 15-20 stocks from universes of many stocks which we have selected using our FVMR methodology and are available to our clients. Since backtesting can be misleading when we find a strategy that we are interested in we try to bring it into the present day by publishing it to our clients.

Published Portfolios – For our ASIR FVMR Model portfolios we usually start by publishing data for about a year to better understand the methodology. For most portfolios, we have a record of publishing and distributing the exact stocks to our clients. So “Since published” refers to the date we started to publish our stock picks for that particular strategy. If publishing goes well, then we create a fund.

Fund – We have already launched ASIR FVMR Model portfolios for Thailand and Asia as funds. For an easier comparison between model portfolio and fund performance, the starting date for these strategies listed above have been set to be the fund inception date, rather than the “since published” date. We calculate all fund returns from the Net Asset Value, hence, it is after all fees paid by the fund and investor.

ASIR Benchmark – There are four key differences in our methodology which make traditional benchmarks not representational of attainable performance.

  1. We do not invest in financial stocks (these can account for as much as 30% of stocks in markets in Asia);

  2. We avoid investing in countries where companies are very slow to announce financial data, and we also avoid countries where companies announce incomplete financial data;

  3. We avoid countries where trading, currency exchange, and other costs are particularly high;

  4. We equally weight our stock holdings (most benchmarks are market capitalization-weighted).
     

Because of these four differences, we internally calculate our ASIR Benchmark for each portfolio. These benchmarks are constructed by equally weighting all stocks in the selection universe.

Prospectus benchmark – This describes the benchmark published in the fund prospectus.

Past performance is no guarantee of future results. We prepared this report for professional and sophisticated investors, and no part should be considered recommendations or investment advice.

Disclaimer

 

This report is for the use of intended recipients only and may not be reproduced, in whole or in part, or delivered or transmitted to any other person without our prior written consent. By accepting this report, the recipient agrees to be bound by the terms and limitations set out herein. The information contained in this report is believed to be reliable, and the opinions contained herein are expressions of belief based on such information. No representation or warranty, express or implied, is made that such information or opinions are accurate, complete or verified and it should not be relied upon as such. Nothing in this report constitutes a representation that any investment strategy or recommendation contained herein is suitable or appropriate to a recipient’s circumstances or otherwise constitutes a personal recommendation. It is published solely for information purposes; it does not constitute an advertisement, a prospectus or other offering document or an offer or a solicitation to buy or sell any securities or related financial instruments in any jurisdiction. Information and opinions contained in this report are published for the reference of the recipients and are not to be relied upon as authoritative or without the recipient’s independent verification or taken in substitution for the exercise of the recipient’s judgment. All opinions contained herein constitute the views of the analyst(s) named in this report, they are subject to change without notice and are not intended to provide the sole basis of any evaluation of the subject securities and companies mentioned in this report. Any reference to past performance should not be taken as an indication of future performance. A. Stotz Investment Research does not accept any liability whatsoever for any direct or consequential loss arising from any use of the materials contained in this report.

This report is prepared for professional and sophisticated investors.

Distribution or publication of this report in any other places to persons which are not permitted under the applicable laws or regulations of such places is strictly prohibited.

All funds are distributed through INDX Advisors (http://www.indxadvisors.com/)

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