Investment Process

At Columbus Macro, our investment process:

1) Uses both quantitative and qualitative methods

2) Evaluates global assets through three key lenses:

• Fundamental valuation
• Investor behavior
• Macroeconomic conditions

Global investing requires robust research capabilities – quantitative tools to continually evaluate large quantities of data as well as qualitative capabilities to interpret fluid policies and events around the world.  Rules-based quantitative screens are not enough to fully contextualize events across different markets, economies, political systems, and cultures.  That’s why our portfolio management team uses both quantitative tools and qualitative assessments to globally identify assets with the best expected risk-return combination.

Advanced systems engineering and data science are needed to effectively capture and analyze large quantities of information from sources around the world.  We incorporate numerous rich data sets including a wide range of proprietary and non-proprietary indicators to quantitatively "score" the investable universe.  Quantitative indicators and models provide our portfolio managers with a systematic, repeatable framework for analysis and supports their objective decision making.

But quantitative signals must be continuously monitored and evaluated by an experienced investment team, who always maintain full discretion over the portfolio.  Models must also be supplemented by expert qualitative analysis and interpretation of business, credit and profit cycles, global monetary/fiscal policies, recession risks, country-specific election dynamics, and geopolitical events to fully contextualize the top-down global investment landscape.

This multi-disciplinary process allows us to consistently analyze global assets through three key lenses: fundamental valuation, investor behavior, and macroeconomic conditions.

Valuation Analysis focuses on identifying fundamental mispricing opportunities.   Since asset prices tend to mean revert to historical norms of quantified fair value over a full market cycle, we opportunistically search for extremes in relative valuation. All else equal, our portfolios will tend to have more exposure to assets which are statistically cheap relative to long-term norms and less exposure to asset classes which appear abnormally expensive. 

Investor Behavior emphasizes technical and sentiment measures including non-proprietary and proprietary measures of relative strength, market breadth, money flow, and institutional positioning.  This analysis helps to determine an asset’s primary trend and flag extremes in “crowd sentiment.” It is also helpful for identifying entry and exit points for each holding. 

Macroeconomic Conditions involves analysis of economic indicators including growth, inflation, and confidence measures as well as industry, sector, and country-specific data.  Individual asset classes tend to perform well under specific macro “regimes” or economic environments and struggle under others as the broader economic environment affects the underlying cash flows of each asset class.

By implementing this investment process, we are able to make top-down, intermediate-to-long-term tactical choices across the investable asset classes within the global opportunity set.