We believe that systematic investing – which we define as a process combining elements of quantitative and qualitative investing – is a superior approach. Systematic investing removes much of the emotion from the decision-making process, a strongpoint of quantitative approaches. But this approach also allows for some, albeit limited, human judgement. The reason is that, in our view, it is difficult for models to capture all relevant information in real time.
At the foundation of Affinity’s systematic process is a proprietary, multi-factor model which ranks stocks, yielding an Affinity Score. This serves as the basis for our highly disciplined investment approach and drives the stock selection process.
Philosophy & Process
Our investment philosophy has allowed us to persevere and prosper through the volatility and ever-changing fashions of investing styles. Affinity seeks to identify and invest in attractively-valued businesses whose underlying fundamentals are improving. We focus on applying an appropriate emphasis on systematic stock selection, comprehensive risk management and disciplined portfolio construction. We seek to generate superior relative returns by employing a time-tested quantitative strategy with a fundamental overlay.
The Affinity process emphasizes not just the prospective returns from these businesses, but also their investment risks. We use a time-tested approach that seeks to identify stocks with the greatest expected outperformace in an objective and efficient manner through a quantitative model called the Affinity Score. The Affinty Score is a quantitative multifactor based upon a combination of independent investment anomalies that have identified stocks with positive excess returns. It is a model that tends to favor attractively valued stocks with improving expectations and favorable momentum in each of those sectors.
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