QES Strategy
The WMA Quantitative Equity Selection (QES) Strategy is our pure equity stock selection portfolio. The selection relies on the WMA Total Market Fundamental Allocation Model, which screens a comprehensive list of all U.S. and International companies meeting fundamental, quantitative, and market-based indicator criteria. After a fundamental screening process to eliminate potentially “problematic” companies (in terms of earnings outlook, balance sheet solidity, excessive valuations, as well as lack of free cash flow), a quantitative scoring methodology then ranks companies against its Industry Group peers. We then focus on companies in each Industry Group that are regularly returning cash to shareholders, either through dividends or buybacks.
The portfolio selection attempts to maintain a broad allocation, with an allocation to stocks in each of our 22 Industry Groups including both U.S. and international companies. Stocks are entered into the portfolio on an equally-weighted basis with a maximum weight of 2.0% per position to reduce company-specific risk. While the targeted holding period is in excess of three months for investments, this strategy will actively rotate out of stocks if the company drops in its peer-group ranking. The objective of the non-benchmarked QES Strategy is current income and absolute returns, seeking to create a better fundamental allocation than the popular dividend stock indexes.