That’s why our enhanced index approach combines different measures rather than relying on one investment style to do all the work.

We focus on three established factors: value, quality and momentum.

Each asks a different question. Is the company attractively priced? Is it financially sound? And are its prospects improving? Together, the answers can provide a fuller picture of the investment opportunity.

Three lenses, one approach

Value helps us find shares that appear inexpensive relative to a company’s fundamentals. Quality highlights financially healthy, well-run businesses with more reliable earnings. Momentum shows whether expectations and share prices are moving in a positive direction.

None of these measures tells the whole story on its own. Take a bank with a low share price but a weak balance sheet. It may look attractive on value, yet score poorly on quality. Or consider a technology company with strong momentum but a demanding valuation. Looking across all three factors helps us weigh those strengths and weaknesses.

The factors can also take turns to lead. Investors may favour resilient, high-quality companies when uncertainty rises. Value can come back into its own when overlooked businesses recover. Momentum can help identify when improving prospects are beginning to show up in share prices.
 

Location matters too. Markets have different mixes of companies, sectors and industries. They may also be at different points in the economic cycle. As a result, the same factor can behave differently from one region to another, even when we apply the same investment framework.

Combining factors can make the portfolio less dependent on any one style being in favour. If one factor is struggling, another may help. Diversification cannot guarantee gains or prevent losses, but it can provide a more balanced route through changing markets.

Turning information into investment decisions
 

A systematic process allows us to assess thousands of companies in the same consistent way. We use 27 metrics to measure value, quality and momentum, then combine them to give each stock an overall score.
 

We start with a market-capitalisation index and give more weight to companies with stronger combined scores. But a high score is only part of the decision. We also consider how volatile and liquid a stock is, as well as any wider risks that could affect the portfolio.
 

Risk controls help us spread active positions across companies, sectors, countries and regions. This limits the influence of any one holding or broad market call. We also aim to keep the portfolio neutral to the market’s overall direction. In other words, we want potential outperformance to come mainly from the three factors, not from a large bet on whether a market, sector or region will rise or fall.

Not every risk appears in a factor score. Geopolitics, interest rates, currencies, inflation and major market themes can all affect returns. Our proprietary platform helps us estimate how individual stocks, the portfolio and the benchmark may respond. If an unintended exposure becomes too large, we can reduce it while retaining the factor exposure we want.

Keeping pace with change

Markets do not stand still, so neither can the portfolio. Share prices move, companies report results and analysts update their forecasts. Political and economic risks change too. We refresh the portfolio regularly so that new information feeds into the factor scores and our risk controls remain effective.

We also look back. By examining which stocks, factors and risks influenced performance, we can check whether the process worked as intended and identify where it could improve.

Final thoughts…
 

Value, quality and momentum each reveal a different part of a company’s investment case. Combining them gives us a broader basis for choosing stocks and building portfolios.

There will be times when one factor struggles, and periods when all three do. But a diversified approach, supported by risk controls and regular review, can be more resilient than relying on a single measure of what makes a company attractive.