What can investors learn from Billy Beane, famed general manager of the Oakland A’s baseball team? First and foremost: Rely less on emotions and more on cold, hard facts to make informed decisions. That means letting market data do the talking, so that investors can avoid exposure to companies with poor fundamentals and capture only the strongest players in the market.
In the upcoming webcast, Moneyball Investing: To Win Big, Avoid the Losers, Julian Koski, co-founder and chief investment officer of New Age Alpha, will outline a portfolio strategy that seeks to unearth a new source of outperformance by specifically excluding companies with weak fundamentals.
“We construct solutions that aim to avoid mispriced stocks caused by human behavior—losers. We combine the alpha potential of active management with the advantages of rules-based investing to build a systematic and repeatable process that aims to provide uncorrelated returns without the risks traditionally associated with active investing,” according to New Age Alpha.
Specifically, the AVDR US LargeCap Leading ETF (CBOE: AVDR) seeks to track the performance of the New Age Alpha U.S. Large-Cap Leading 50 Index.
According to New Age Alpha, investors think of picking winners when their goal is to avoid the losers. AVDR aims to outperform by using the human factor to avoid the companies that are most likely to fail to deliver the growth implied by their stock prices.
“Utilizing these principles built by the insurance industry, we construct portfolio solutions, indexes and direct indexing options that aim to identify and avoid a mispricing risk caused by human behavior—the Human Factor,” according to New Age Alpha.
Starting with a known investment universe, the S&P 500, AVDR identifies and removes the 450 companies with the highest human factor scores to create a portfolio of 50 stocks with the lowest human factor.
Combining the alpha potential of active management with the advantages of rules-based investing, AVDR seeks to outperform existing large-cap benchmarks.
“Combining actuarial science with a digital approach to mitigate the risk of human behavior in investment portfolios,” according to New Age Alpha.
Additionally, the AVDR US LargeCap ESG ETF (CBOE: AVDG) seeks to track the performance of the Alpha U.S. Large-Cap ESG Index.
Like AVDR, AVDG aims to outperform by avoiding low-rated ESG companies that it believes are most likely to fail to deliver the growth implied by their stock prices. Starting with a known investment universe, the Refinitiv U.S. Total Return Index, AVDG applies negative screening to remove all but the highest-rated ESG companies and stocks with the lowest human factor to create a portfolio of 50 highly rated ESG stocks that provide the potential to outperform.
Financial advisors who are interested in learning more about the New Age Alpha strategy can register for the Tuesday, January 25 webcast here.