EP Best Trends - Europe

Equity markets move in phases of varying trends and volatility, and this strategy's objective is to invest in a universe of Developed Europe stocks that are exhibiting strongly positive price trends over the medium to long-term investment horizon. The stock selection is powered by a proprietary trend capture model that allocates a Trend Score to each stock in the investment universe. The trend score determines each stock's rank in the investment universe during the portfolio formation process. The strategy employs a systematic rule-based stock selection and portfolio construction process, and this applies both to stock selection and portfolio rebalancing without human interference. There is a maximum position size limit of circa 7%, though securities already held in the portfolio are allowed to rise up to around 10% weight. The strategy seeks to remain fully invested but the number of portfolio positions can vary based on the number of securities available that satisfy the stock selection criteria. Aside from a robust stock selection framework, the strategy’s other strength is its risk management driven portfolio construction process. The strategy does not need to have a fixed rebalancing date, rather the decision on when to rebalance, how many securities to hold, and what percentage of the budget to invest in stocks, is dictated by the number of securities that fulfil the strategy’s stock selection criteria. If the turnover in the previous 14 odd calendar days exceeds around 40%, then no rebalancing takes place, otherwise rebalancing only takes place if either more than circa 15% of the portfolio’s weight no longer satisfies the desired characteristics, or if the portfolio's aggregate trend score is lower than the acceptance threshold. This limits unnecessary trading so that trading only occurs when the portfolio shape is sufficiently out of kilter.