AGA's investment philosophy stems from the core principle that country selection provides ongoing return opportunities within a global equity allocation. We believe that in the future, countries will pursue independent paths in terms of fiscal and monetary policy, leading to a differentiation in the returns of country stock markets. Our proprietary research has shown that:
- In the long-run, country effects dominate sector effects.
- Country selection offers outperformance opportunities.
Our global equity strategies are created from a proprietary country ranking model which evaluates country markets from the top down. Our four step process is detailed below.
-
Step 1:
Qualify
CountriesWe qualify countries using consistent criteria
-
Step 2:
Analyze
FactorsWe analyze four groups:
1. Fundamental
2. Momentum
3. Risk
4. Valuation -
Step 3:
Rank
CountriesWe rank countries based relative Rank Countries on attractiveness
-
Step 4:
Create
PortfoliosWe create portfolios from our rankings, based on client constraints
We use three key criteria to qualify countries for our universe. The countries in our universe represent 31 countries and just over 97% of world capital markets.
Our criteria:
- MSCI All Country World Index constituent
- Liquid ETF
- Reliable monthly data
Europe
- Austria
- Belgium
- France
- Germany
- Italy
- Netherlands
- Russia
- Spain
- Sweden
- Switzerland
- Turkey *
- UK
Each month, we analyze 40 factors in four major groups, based on our belief that certain factors drive the relative return of equity markets. Our factors are based on historically successful investment strategies and are consistent with economic theory. This helps reduce style risk in our portfolios.
We rank countries based on relative attractiveness. Country ranking is done on a monthly basis during the first week of the month. Below is a sample of how we rank countries.
Our portfolios are created and rebalanced monthly in accordance with our new country ranking model. Our portfolios are constructed using single-country ETFs in order to minimize single-security risk and provide low cost, diversified exposure to a country's equity market.
