Inside The Quant Growth & Income Portfolio

Key Concepts

• Quantamental Approach: A hybrid investment strategy combining quantitative data-driven models with fundamental analysis.
• GARP (Growth at a Reasonable Price): An investment strategy that selects stocks based on value, profitability, growth, momentum, and positive EPS revisions.
• QGI (Quant Growth and Income Portfolio): A new, systematic, 30-stock portfolio designed to provide both capital appreciation and dividend income.
• Dividend Safety Grades: A proprietary scoring system (A+ to F) used to assess the sustainability of dividends and predict potential cuts.
• Barbell Strategy: A portfolio construction technique balancing high-growth, volatile assets with stable, income-generating assets to manage risk.
• VWAP (Volume Weighted Average Price): The average price a stock has traded at throughout the day, based on both volume and price, used for portfolio rebalancing.

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1. Overview of the Quant Growth and Income (QGI) Portfolio

The QGI portfolio is a new product launching on June 3rd, designed to meet subscriber demand for an income-oriented, data-driven investment strategy. Unlike previous products like Alpha Picks (focused on capital appreciation) or the Pro Quant Portfolio (PQP), QGI specifically targets stocks that pay dividends while maintaining the rigorous "Quant Strong Buy" criteria.

• Objective: To outperform the Vanguard High Dividend Yield ETF (VYM) in total return while maintaining a comparable dividend yield.
• Structure: A 30-stock portfolio rebalanced bi-weekly (every other Wednesday).
• Selection Criteria: Stocks must have an active dividend, a "Buy" or "Strong Buy" Quant rating, specific dividend safety/growth grades, and a minimum market cap of $400 million.

2. Methodology and Framework

The portfolio relies on a systematic, emotion-free algorithm that processes data from the SEC and S&P Global daily.

• Buy Rules: Stocks must pass screens for value, growth, profitability, momentum, and EPS revisions, alongside proprietary dividend safety and growth metrics.
• Sell Rules: A stock is removed if its Quant rating drops to "Sell" or "Strong Sell," if it has a prolonged "Hold" signal, if dividend safety grades deteriorate (D+ or lower), if the dividend is cut/suspended, or if there is a delayed SEC filing.
• Diversification: The portfolio maintains a "line in the sand" regarding sector concentration, typically limiting any single sector (like technology) to 35% to prevent excessive risk.

3. Performance and Backtesting

The strategy was backtested against the Vanguard High Dividend Yield ETF (VYM) using data from 2015 to 2025.

• Cumulative Returns: A $10,000 investment in the QGI strategy in 2015 would have grown to approximately $60,191, compared to $30,000 for the benchmark.
• Total Return: The strategy yielded a 502% return versus 203% for the benchmark over the same period.
• Resilience: While the portfolio experienced slight underperformance during the 2020 pandemic, it demonstrated a rapid recovery, outperforming the benchmark by significant margins (9.3%, 8%, and 8.7%) in the subsequent years.

4. Macroeconomic Context

Kevin Sanford, the team's macro strategist, highlighted the "Four Horsemen" currently impacting the market:

• Inflation: Persistent sticky CPI (3.8%) and a surging Producer Price Index (6%).
• Volatility: Driven by geopolitical tensions (e.g., Iran conflict) and energy price shocks.
• Uncertainty: Policy shifts at the Federal Reserve and the impact of the midterm election cycle.
• Market Highs: Despite macro headwinds, the market remains in a "greed" phase, largely driven by technology and AI, while other sectors remain cautious.

5. Notable Quotes

• Steven Cress: "Never chase yield. Typically, the higher the yield, the riskier the stock."
• Steven Cress: "Diversification helps to minimize your risk and maximize your returns."
• Kevin Sanford: "In this environment of rising input costs, central bank uncertainty, passive strategies can just get caught in the crossfire, which is precisely why our systematic and income-oriented framework is so vital right now."

6. Synthesis and Conclusion

The QGI portfolio serves as a strategic tool for investors looking to navigate current market volatility through a "barbell" approach. By combining the systematic, data-driven rigor of Seeking Alpha’s Quant system with proprietary dividend safety grades, the product aims to provide a reliable income stream without sacrificing the potential for capital appreciation. The portfolio is designed to be transparent, with rebalancing updates provided bi-weekly and a commitment to ongoing communication through webinars and article commentary.