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Chicago Equity Partners
180 North LaSalle Street
Suite 3800
Chicago, IL 60601

Phone: (312) 629-8200
Fax: (312) 629-2701
info@chicagoequity.com

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FactorSmart

PHILOSOPHY

We believe certain fundamental characteristics drive stock performance. Disciplined portfolio construction is critical to our goal of generating long-term risk-adjusted return. We focus on adding value through factor exposures and taking risks that are consistently rewarded by the market.

PROCESS

CEP's investment process includes three proprietary models: a quantitative stock selection model, a market phase identification (MPI) model, and an integrated risk model. The dynamic quantitative stock selection model evaluates the expected returns of a broad universe of U.S. stocks. The MPI model determines style and factor preferences. The integrated risk model, which combines risk and return expectations, is used to optimize the portfolio.

STRATEGIES

CEP combines three proprietary quantitative models (alpha, risk, and market phase identification) with an experienced team of portfolio managers to most effectively exploit market inefficiencies and generate consistent excess returns. Each portfolio emphasizes the factors and styles that are expected to perform well in each of three market regimes: Expansion, Downturn, and Rebound. The result is a well-diversified portfolio of companies with targeted factor exposures and broad-based sector allocations, built through a disciplined risk-controlled process.

  • FactorSmart Dynamic Beta
  • FactorSmart Core
  • FactorSmart Growth
  • FactorSmart Value

ADDING ALPHA WITH DYNAMIC BETAS

FactorSmart strategies are similar to traditional Smart Beta strategies in that they seek to provide outperformance at lower fees than typical active managers through rules-based portfolio construction. FactorSmart strategies, however, do more than provide exposure to a single static factor like traditional Smart Beta offerings.

Strategy Comparison Traditional
Passive
Traditional
Smart Beta
FactorSmart
Systematic, rules-based portfolio construction
Low cost relative to traditional active management
Seeks to outperform traditional market cap-weighted indexes  
Robust factor specification    
Dynamic factor exposures    
Designed to capture alpha in all market environments    

Disclaimer: Investing involves risk, including the possible loss of principal. There is no guarantee that any investment processes or strategy discussed will be effective. Diversification does not guarantee a profit or eliminate the risk of a loss. It is not possible to invest directly in an index.