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   Midwest Investment Philosophy

Midwest creates and manages quantitative equity and fixed income portfolios designed to provide strong, consistent, and low-cost exposure to cross-sectional factors that exhibit a statistically significant and sustainable long-term edge over a given benchmark index. Our reasoning is as follows:
  • For diversified portfolios, the majority of variation in active manager returns can be attributed to overall exposure to various size, style, sector, credit quality, and other risk factors, since non-systematic security-specific elements tend to cancel each other out.

  • Over a complete market cycle, few active managers can beat a passive index designed to objectively track these cross-sectional factors due to expenses, market timing, sector weightings, style drift, and sub-optimal behavioral biases.

  • The few active managers that can consistently outperform their tracking index are extremely difficult to identify in advance since past performance is a weak predictor of future results, and true skill is often indistinguishable from luck given the limited duration of most managersí track records.

Therefore, Midwest believes that investors are best served by focusing on and managing factor exposure in a quantitative manner as opposed to traditional individual security selection based on highly subjective and often unreliable forecasts and projections. This approach allows us to quantify with a high confidence level the source and significance of our edge over a given benchmark, and eliminates the behavioral active management risks that often dilute that edge.


         Equity Portfolio Management

         Fixed Income Portfolio Management




8383 Greenway Blvd., Suite 600   •   Middleton, WI 53562   •   (608) 273-2900   •   contact@quantmanagement.com

Past performance does not guarantee future success. All investments are subject to risks, including the possible loss of principal. You should consider Midwest based on the suitability of its investment strategies in relation to your objectives and risk tolerance. By using this website, you acknowledge that you have read and accepted Midwest's Terms of Use.

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