The Bridgeway Investment Philosophy

A Strict Quantitative Approach

Bridgeway Capital Management™’s investment approach is based on the conviction that long-term outperformance can best be achieved through the use of quantitative methods to select stocks and construct portfolios.

The quantitative models we use to drive stock selection are proprietary and vary with each portfolio style. We run each actively managed portfolio with a goal of exceeding the performance of its benchmark universe through superior:

• stock selection
• risk management
• trade execution

Portfolio Construction and Management Highlights

Purely quantitative selection process – We select stocks using a bottom up process in which quantitative models identify securities to buy, sell, or hold. The models are fed publicly available data from multiple sources. No Wall Street research is used and no management interviews or site visits are conducted. In short – the stock selection process is purely quantitative.

Focus on risk management in constructing portfolios – Each portfolio uses several different models (e.g. growth-based, momentum-based, etc.) to select stocks. This “model diversification” helps mitigate the risks inherent to any one approach. Each model is operated by a different member of the portfolio’s management team. Team members closely monitor company, industry, and sector exposures to avoid significant over-or under-weightings versus the benchmark universe.

Trading efficiency – Bridgeway maintains a strong focus on minimizing trade execution costs as a way to provide investors with better returns under all market conditions. This commitment is reflected in our complete avoidance of soft dollar arrangements, under which the value of investment research and other services provided are factored into the “best execution” analysis. Bridgeway ranks in the top quarter of managers in trading cost efficiency, according to Plexus Corp, an industry analyst.