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Using actuarial science rather than traditional portfolio management ideas and combining it with, data, and technology, we aim to avoid the losers in your portfolio.

How we think

Invest with the power of probabilities

the h-factor

The h-factor measures the probability a company will fail to meet market expectations caused by human behavior.

The H-Factor, previously known as the Expectation Risk Factor or ERF
is designed to identify mispriced stocks

The h-factor measures the probability a company will fill to meet market expectations. We use the h-factor to identify the losers.

Imagine the extra return you might have made by using New Age Alpha’s h-factor.

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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 This snapshot is taken at a particular point in time and any analysis or information contained in it is outdated and should not be relied upon.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 it works

Manage Risk like an Actuary

how the h-factor

The h-factor measures the probability a company will fail to meet market expectations caused by human behavior.

The H-Factor, previously known as the Expectation Risk Factor or ERF
works

  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 h-factor is calculated by placing the stock's Implied Growth Rate on the distribution curve. The h-factor is the company's likelihood of failing to deliver the implied growth rate.

why is a lower h-factor better?

A low h-factor represents a low probability of failing to deliver the growth implied by the stock price. We believe the lower the h-factor, the higher the likelihood of delivering the implied growth.

ERF

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