Our strategy in the EAFE asset class seeks to equally blend a growth investing style with a risk-conscious approach to curb portfolio volatility. We believe this is important given the wider diversity of international equity markets.
Because of the highly specialized alternatives and the magnitude of global markets, Greystone forged a strategic business alliance with proven providers of international investment management, Goldman Sachs Asset Management (GSAM) and Hansberger Global Investors (HGI), who act as our sub-advisors.
Investors choose among a fund blending the two sub-advisors and stand-alone funds highlighting each sub-advisor's investment philosophy.
Hansberger’s growth style
Like Greystone, HGI seeks companies that grow profits, maintain competitive market advantage through innovative product design, exceptional management, strong market share and superior profitability.
The investment process combines proprietary quantitative and qualitative methodologies. Portfolios are built from the bottom-up.
Starting with a universe of about 10,000 companies, HGI applies quantitative screens to identify companies with superior growth characteristics (profitability, secular growth, sustainable competitive advantage, strong capital structure). This narrows the universe to about 500-600 companies. Adding relative valuation and price momentum to the screening criteria, the universe narrows to 80-100 stocks, which are the stocks identified for detailed examination.
Candidate companies receive fundamental analysis from the HGI growth team (products, market share, distribution, management, etc.) to narrow the candidate list to a final portfolio.
Goldman’s quantitative approach
GSAM applies quantitative processes from the bottom up (stock selection) and the top down (sector, country and currency allocations).
GSAM quantitative teams calculate expected returns on approximately 3,500 stocks every day, using fundamental investment criteria that have been historically tested. Criteria weights are adjusted depending on historical returns, correlation and turnover, and historical & expected volatility.
Concurrently, forecasts are made for 21 stock markets and 10 currencies based on valuation, momentum, risk premium, fund flows and macro factors. There is “active” currency management; however, there is no active currency hedging.
The bottom-up/top-down elements are brought together through computer-based optimization models that consider portfolio objectives, target country allocations, return forecasts, risk and transaction costs.
The portfolio is reoptimized daily. Stocks are sold when a more-attractive opportunity is found based on the overall risk/return (net of transaction costs).