Fundamental is a moderately low-beta, moderately low-turnover trading plan for stocks traded on major U.S. exchanges. It focuses on providing above-market returns over the longer term while keeping a variability of returns that is similar to the market’s risk profile.
Fundamental takes its name because it does not reference any technical analysis factors or price ratios; it only has a minimum market capitalization of $1 billion for consideration in the portfolio. The plan uses growth in income and revenues, combined with measurements of earnings quality and financial stability, to pick companies that are traded on U.S. exchanges, from that group the plan buys the stocks that have the highest returns on equity. Stocks that meet the basic screening criteria are ranked by Return on Equity (ROE), and the highest-ranking qualifiers are then held.
