HomeRI ResourceRBC Global Asset ManagementCapturing alpha from non-traditional sources
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Assuming that the financial data has been squeezed dry, we need to find new sources of out-performance – new insights to deliver alternative sources of alpha. As someone who has been picking stocks for years I have found many instances where two businesses of similar size, location, using similar people and processes to produce identical goods or services that are sold to the same customers, have produced dramatically different financial returns over the long run. Same industry, same inputs, same outputs, different financial outcomes… why?

In my opinion it is down to intangible or non-financial data. These intangible data include things like corporate culture, employee and customer engagement, effectiveness of R&D and a willingness to place a high degree of importance on Environmental, Social & Governance (ESG) factors. These are typically long term intangible assets that can have a short term financial cost, but will pay off handsomely over the longer term. These intangible assets are hardly ever found in the report and accounts. Information on them is hard to access, assimilate and conclude upon. But they are nonetheless a very powerful predictor of long term financial performance.

CATEGORIES: ASSET CLASSES INVESTMENT STYLE Asset Classes: Equity Investment Style: ESG