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Active Management Reimagined

New Age Alpha is an asset management firm delivering diverse investment strategies.

Using actuarial science, data, and technology, we aim to mitigate human behavior risks in your portfolios.

How we think

Human behavior is the hidden risk in your portfolio

humans interpret vague and ambiguous information in
a systematically incorrect way

Human behavior is the hidden risk in your portfolio

Many portfolio managers may overlook the impact of human behavior when selecting investments.

Known financials, such as earnings statements, are easily interpreted and generally impact a stock in an unbiased, appropriate way.

Humans interpret information that’s not clear or quantifiable in a systematically incorrect way, such as news or new product announcements. This irrational behavior can often lead to a stock being mispriced, causing an element of investment risk. We avoid these stocks.

How we mitigate this risk

Invest with the power of probabilities

the expectation risk factor (ERF) is designed to identify mispriced stocks

Our proprietary Expectation Risk Factor Methodology (ERF) is designed to identify mispriced stocks. It detects and quantifies mispricing by calculating the probability of a company failing to meet market expectations.

This probability is called the ERF Score. When the ERF score is high, indicating overpricing, we avoid the stock from investment; conversely, when it is low, indicating underpricing, we consider purchasing the stock.

Imagine the extra return you might have made by using New Age Alpha’s Expectation Risk Factor (ERF).

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Important Disclosure

The snapshot is being provided for illustrative purposes only and should not be construed as providing investment advice or as a recommendation to buy or sell any particular security. This snapshot is taken at a particular point in time and any analysis or information contained in it is outdated and should not be relied upon. Past performance is not an indication or a guarantee of future results. For full disclosure click here.

How we calculate the ERF Score

How the Expectation Risk Factor works

a lower ERF score is always better

  1. 01
    calculate the implied growth rate

    The implied growth rate (IGR) is calculated using market participants' expectations and the current stock price.

  2. 02
    estimate the growth curve distribution

    Then, the implied growth is compared with historical growth rates from the past 12 quarters for each stock.

  3. 03
    place the implied growth rate on the curve

    Finally, an ERF score is calculated by placing the stock's Implied Growth Rate on the distribution curve. The ERF probability is the company's likelihood of failing to deliver the implied growth rate.

why is a lower ERF score better?

A low ERF score represents a low probability of failing to deliver the growth implied by the stock price. In other words, the lower the ERF score, the more likely the stock may be to deliver growth.

ERF

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