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SectorQuant
425 Acoma Street
Denver, CO 80204
Phone: 303-820-3000
mail@sectorquant.com

The SectorQuant Investment Philosophy

SectorQuant Capital Management LLC was founded on two principles, valid investment strategy executed on a cost effective platform. Rejecting the idea that investors should divide their stock portfolio among several subcategorizes of styles and sectors, we recognize many styles and sectors rotate in and out of favor.

The objective of SectorQuant Capital Management is through quantitative modeling and trend analysis (sector/style rotation) to diligently over weight client portfolios in the lower risk, attractive sectors in the market at any given time, while under weighting the higher risk unattractive groups. At the same time we seek to take advantage of the ever-declining cost of doing these transactions.

Client portfolios will consist of ETFs or no-load mutual funds, which we feel, exposes clients to the most attractive sectors and styles in the market at any moment in time. Our goal is to keep our portfolios over weighed in the top 50% of the groups and sectors. In reality if we can just avoid the worst 20% we are confident the effort will prove very worthwhile. In the near future, we will be adding the ability to trade "stock baskets" to better isolate the best trends in the market.

The Capital Appreciation Strategy at SQCM is a blend of value, growth (growth at a reasonable price GARP) and quantitative analysis. We call ourselves middle down, bottom up quantitative research shop. We apply our proprietary GARP and trend analysis screens to over 150 industry sub-sectors and the nine style boxes as defined by MorningStar. Then we screen a database of over 8,500 individual stocks to verify our sector/style findings. Finally we take these results rank them in order of attractiveness

The Income Strategy at SectorQuant we believe investors are well served to consider a broad spectrum of alternatives when pursuing an income objective. SectorQuant has identified over 12 income-producing sectors, which we then put into 3 trading groups. We group the sectors this way because the price action within the group is primarily driven by primary trends of interest rates and or the stock market.

In the interest rate sensitive group (long-term; Treasuries, municipals, high grade corporate bonds) prices are primarily affected by the direction of interest rates. In the equity related group (convertible bonds, utility stocks, real estate trust, equity income, high yield bonds), prices are primarily affected by the direction of the stock market. And the third group; inflation indexed and short maturity debt, (which includes TIPS, money markets, T-Bills and CDs) are defensive/liquidity providing instruments which are insensitive to movements in either interest rates or the stock market.

Risk Averse Investors: To address the needs of moderate and conservative investors SectorQuant will blend the income with the capital appreciation strategies. The blended portfolio has the lower volatility and more defensive characteristics desired by more risk adverse investors. We also offer tax efficient strategies.