… to present complex messages in a simple and intuitive way…

Above all, IDEAS is intended to present complex messages arising from combinations of investment factors and measures in ways that appear simple – and that yield positive results over most periods.

The components of the approach are the building blocks of all investment analysis:

• • Value,

• • Forward Growth,

• • Operating quality (measured by return on capital) and

• • Estimates Momentum.

• … and to provide strategic insights

  In addition, IDEAS enables investment measures to be compared and analysed at the market, regional and sector levels, aggregated from the bottom up (unlike most equity strategy). This provides both longer term investment perspectives (value and growth/quality) and tactical ones (timing, delivered by Estimates Momentum).

• Configuration and process: combinations and context

  The data and concepts underlying the system are accessible and widely used. However, IDEAS applies and presents them in a way that results in rounded and comprehensive profiles on large populations of stocks, sectors and other aggregates. The perspectives that result from this cannot be gained from such measures individually.

• These perspectives are achieved in two ways:

• • Combining measures: the inputs set measures of growth and value on one side against a behavioural indicator on the other. Juxtaposing measures that are not necessarily correlated with each other can help eliminate unattractive combinations (such as ‘value traps’) and assist the process of identifying pricing, timing and other market inefficiencies that, in turn, can lead to outperformance or underperformance.

• • Providing context: calculating rankings against these measures helps to provide the relative perspective that is often missing from vertical, source-based fundamental and other qualitative, stock-specific research. The objective is to add a sense of investment ‘opportunity cost’, indicating which stocks may rank better in a common and systematic framework – so also potentially aiding outperformance.

• A stand-alone framework that also focuses and complements fundamental and other research…

  What results from this can act in its own right as a framework for generating investment views. The individual inputs and their various combinations have been tested for developed global equity regions, with positive results for relative price performance over time. Back-tests and histories are available.

• Alternatively, IDEAS can augment investors’ own processes, adding measures, data and checks for further use in proprietary systems.

• … saving time and helping to manage resources

  Finally, the system can raise questions that often need to be addressed further by detailed qualitative analysis. Doing so can help to focus investment research and the questions to ask analysts, saving time and resources. Where an analyst’s conviction and understanding are strongly at odds with the consensus-based message delivered by IDEAS, it gives that analyst a clear view of the targets to attack, allowing them to bring to bear a higher information level and to argue a case – without being gratuitously contrarian.