Quotient Investors uses a disciplined quantitative approach to build its proprietary valuation models. Quotient's models incorporate value, growth, momentum, and custom valuation models to identify price drivers unique to companies within an industry.
The important factors for the portfolio construction process include company valuations, risk model forecasts, risk budgeting allocations, and transaction cost estimates. These data are used in a portfolio construction process that achieves the desired positions for the strategy.
Risk management is integral to Quotient's disciplined quantitative process. The majority of the active rick comes from individual stock selection, while industry and style risk account for a small portion and active market risk is close to zero.