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Equity manager using a highly disciplined, benchmark-driven investment process
Mellon Equity's approach to active equity management is very disciplined and highly unique. The equity management process relies heavily upon a proprietary multifactor valuation technique to focus on stock selection. The firm then uses a disciplined portfolio construction process to combine the attractive stocks into a portfolio that works to reduce market risk (by not trying to time the markets), sector and industry risks (by not weighting the portfolio significantly different from the benchmark), and other common factor risks (non-market characteristics of stocks which affect returns across stocks).
- Headquartered in Pittsburgh, Pennsylvania, USA
- Founded in 1983
- AUM US$ 25.3 billion*
- Highly-disciplined benchmark-driven manager
- Proprietary quantitative process, which has provided the basis for stock selection since foundation in 1983
- Socially responsible investing
The philosophy's central principle is that investment success comes from:
The firm believes that a portfolio can consistently outperform any target benchmark when the basket of stocks selected has positive exposure to fundamental factors currently being rewarded in the marketplace, while controlling incremental risk.
The steps in Mellon Equity's proprietary quantitative process include:
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Identifying fundamental valuation factors driving stock returns
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Dynamically combining these factors by expected contribution to excess return
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Ranking the 3500 stock universe by expected outperformance
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Performing a fundamental company-by-company short list and evaluating data not captured in the stock ranking
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Using the rankings and qualitative information to construct risk-controlled portfolios
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Evaluating performance and systematically reviewing
* Source: Mellon Equity Associates, LLP as at 30 June 2007
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