Factor-Based Portfolios

Investment Philosophy

Validea Capital was founded based on the principle that the best way to outperform the market is to learn from strategies that have done so in the past. Our stock selection models are based on our interpretation of the published strategies of investors and academics who have developed factor-based strategies that beat the market over the long-term.

We believe that factor-based strategies supported by long-term academic research offer a foundation for superior stock selection, and implementing these techniques in a disciplined, unemotional and systematic manner can lead to market outperformance. We utilize our proprietary technology to leverage these strategies, and follow a systematic investment process that eliminates emotion and bias, and focuses on long term outperformance

Our Portfolios

We build custom portfolios for each client using the 45+ individual models we follow. The models cover all the major investing factors, including value, momentum, quality, and low volatility. We offer a separately managed account for each client and every one of our investors receives an individual consultation with our investment team regarding their personal investing goals and risk tolerance before any of their money is invested.

  Custom Models

We offer a custom blend of the 45+ quantitative models we follow for each client. Since each client has different needs and preferences, we can develop a customized approach that best fits each individual situation. For investors looking to limit the risk of following individual factors, we can combine uncorrelated factors to provide a smoother return over time. For clients looking for exposure to a specific factor like value or momentum, we can develop a combination of individual models that diversify exposure within the factor and limit the risk associated with a single approach. We can build concentrated portfolios for clients who seek aggressive factor exposure and more diversified models for those looking to minimize tracking error. We can also offer customized solutions for other portfolio construction considerations like sector limitations and position weighting.

  Core Models

For clients who do not require a custom solution, we offer a group of core models that combine diversified groups of our factor models together. Our five core portfolios (Consensus, Select Blend, Top Gurus, Dividend Value and International) are appropriate for investors with above average risk tolerance and a long term time horizon. The Core portfolios are all managed with an intelligent tax management system, which seeks to maximize long term gains and tax efficiency. All portfolios are rebalanced on a 28 day cycle, which ensures disciplined and consistent active portfolio management and strategy adherence.

  Direct Indexing

Our Direct Indexing products allow investors to track the returns of popular market indexes in a more tax efficient manner than traditional fund-based approaches. Clients can specify the index they would like to track and we will build a portfolio using the individual stocks in that index. Direct Indexing allows investors to closely track the performance of an index, while gaining the advantages of tax loss harvesting over time. It also allows for personalized customization of the index using factors like ESG or individual security exclusion.