Federated Hermes MDT Advisers has integrated a new 'economic moat' factor into its quantitative investing model, a strategic enhancement implemented in September 2023. This addition is designed to improve stock selection, particularly among highly out-of-favor stocks, by identifying companies with strong competitive advantages that can defend their profitability.
The 'industry moat' factor aggregates estimated moats across a company's industry, aiming to capitalize on spending related to moat-building activities. This approach allows the model to identify wonderful companies at potentially wonderful prices, especially those that may be temporarily out of favor but possess established competitive defenses.
This development is significant for Federated Hermes' MDT strategies, which managed $14.2 billion in various investment vehicles as of December 31, 2024. The refined quantitative process seeks to provide additive sources of excess returns and reinforces the firm's commitment to disciplined, data-driven investment management.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.