Launching Factor Investing Hub: Beat The Market With Smart Beta

Editor’s note: This article is meant to introduce Pearl Gray Equity and Research’s new Marketplace service, The Factor Investing Hub.

The Factor Investing Hub introduces a statistical rules-driven investment approach that deals with post-moderation issues. Let’s face it, steady economic growth and tame inflation are a thing of the past, and there’s an abundance of financial literature suggesting we need to shift away from “buy and hold” portfolios and into long-only rotational asset allocation strategies.

At the Factor Investing Hub, we leverage the popular concept of factor investing to discover best-in-class portfolio balancing solutions while implementing objective individual security selection. Factor investing, otherwise known as Smart Beta, utilizes advanced asset pricing techniques to identify the key macroeconomic and fundamental drivers behind the broader financial markets and individual assets.

The Factor Investing Hub simplifies factor investing processes by explaining model outputs with a qualitative overlay and by emphasizing investing from a portfolio vantage point.

By subscribing to The Factor Investing Hub, you’ll receive guidance on balancing and rebalancing a portfolio to achieve evidence-based non-cyclical returns. Furthermore, you’ll garner cutting-edge knowledge that you can apply in your own analysis if your breadth exceeds our exclusive weekly ideas.

The regular rate for the service is $44.99 per month or $424.99 annually. But to celebrate the launch of The Factor Investing Hub, you have an opportunity until October 16 to secure a special, highly discounted lifetime subscription rate of $324.99 per year.

What Does Our Service Entail?

The Basic Process

Tackling the financial market implications that might arise in a post-moderation economy can be tough, but let’s not forget that excess volatility also provides opportunity. At its core, The Factor Investing Hub wants to counteract subjective, actively managed investment ideologies and presents an evidence-based statistical solution with a qualitative overlay. Our methodology utilizes factor investing literature intertwined with bottom-to-top analysis of individual assets to formulate optimized investment portfolios.

So, what does a typical analysis look like?

Firstly, we assess the implied macroeconomic environment on a long and short-term basis to determine the financial markets’ future appetite. After we’ve assigned a probability to an array of economic outcomes, we select a high-conviction investment strategy that balances our portfolio according to asset class weights and sector exposure.

But how do we categorize assets?

Factor investing follows a statistical approach, which runs regressions on thousands of daily return samples to identify the ‘DNA’ of various traded securities.

DNA refers to an asset’s market categorization. For instance, is it a value stock, a growth stock, a safe haven asset, high-yield income security, or a low-volatility instrument?

Once we’ve consolidated an asset’s DNA with a statistical model, we group it into what we call a portfolio sort. From thereon, we test how the sorted portfolio performs in cohesion with various implied economic stages to hypothesize which asset categories will outperform the market on a medium-term basis (usually quarterly or semi-annually).

Unique Value Additivity

A key value-add that The Factor Investing Hub presents is its deeper dive into individual securities. By utilizing an array of AI-integrated financial models, we’re able to determine company-specific performance forecasts with reasonable accuracy.

Furthermore, we have a wealth of knowledge surrounding emerging market geopolitics, which is a key element of modern asset pricing. Additionally, advanced industry knowledge allows us to formulate well-rounded analyses communicated in simple terms.

What Do You Get With Your Subscription?

The Factor Investing Hub gears its offerings to ensure subscribers receive a well-balanced service. Your subscription provides you with the following.

1. Exclusive Bi-Weekly Security Picks: The Factor Investing Hub’s bi-weekly security picks span stocks, bonds, and REITs. You can expect exclusive ideas generated from advanced asset pricing methods, emphasizing how individual securities could fit into a broader portfolio.
2. Advanced Qualitative Analysis: Our weekly picks are backed by evidence-based financial theory. Additionally, we add substance to our coverage by discussing idiosyncrasies such as corporate events and geopolitics.
3. Predictive Models: The Factor Investing Hub leverages artificial intelligence by utilizing artificial neural networks to forecast portfolio performance. You can expect features such as probabilistic price targets, risk Vs. return attribution analysis, principal component analysis, and more.
4. Smart Beta Portfolios: Our subscriber portal includes an embedded portfolio that tracks all our asset picks. Also, we have an array of sub-portfolios that group our portfolio allocations by category (namely value, growth, quality, momentum, low volatility, and high dividend yield). Sub-grouping allows subscribers to assess categorical performance to understand various market climates better.
5. Monthly Portfolio Review: The Factor Investing Hub’s monthly portfolio review includes a theoretical discussion substantiated by quantitative risk analysis. You can expect an array of self-generated metrics here, including active return, Sharpe ratios, value-at-risk, and information ratios. In a nutshell, our monthly portfolio review justifies our weekly asset picks to ensure we lead an objective investment process.
6. Earnings Previews: Quarterly earnings previews are modeled with neural networks. Moreover, we explain the model inputs by discussing quarterly events.
7. Live Chatroom: Subscribers have 24/7 access to a live chatroom. The chatroom provides an interactive platform suitable for Q&As and investor group meetings.

Who Provides The Service?

Pearl Gray Equity & Research

Seeking Alpha contributor Pearl Gray Equity and Research leads The Factor Investing Hub as a constituent of its premium service offerings.

Pearl Gray functions as a free market think tank and proprietary investment fund. The firm’s publications span quantitative asset pricing, geopolitical discussion, security valuation, economic analysis, and more. In addition, Pearl Gray is AI-competent, which is a tremendous value proposition in today’s financial markets.

Steve Booyens

Steve co-founded Pearl Gray Equity and Research in 2020 and has been responsible for institutional equity research and portfolio strategy ever since. Before co-founding the firm, Steve spent time working in various finance roles in London and South Africa. He holds an MSc in Investment Banking from Queen Mary – University of London and is working towards his Ph.D. in Finance, in which he’s attempting to challenge the renowned Fama & French 4-factor pricing model by incorporating ESG factors.

Chris Oosthuizen

Assisting Steve with The Factor Investing Hub’s journey is CoGo Data Solutions, which holds over 30 years of experience in data analytics. CoGo data’s Chris Oosthuizen will lead the financial modeling process by utilizing big data and machine learning to optimize results. Chris holds an undergraduate degree in Civil Engineering and a Master’s degree in Data Science.

Discover A New Era of Portfolio Diversification

Our rationale for starting The Factor Investing hub is to provide investors with the necessary knowledge to formulate index-beating investing portfolios amid the waning efficiency of “buy and hold” portfolios.

If you’re looking for a hybrid active/passive investment methodology based on proven market-beating concepts, then sign up for The Factor Investing Hub’s 14-day free trial.

In addition, don’t forget that we’re running an annual discounted price of $324.99 until October 16. We look forward to welcoming like-minded investors onboard!

If you’re reading this via Seeking Alpha’s mobile app, to try this service right now, go to seekingalpha.com and enter The Factor Investing Hub in the site search to visit my Marketplace Service checkout page.