Our investment philosophy recognizes that the challenges to successful investing have increased over time and that there are now more participants trying to exploit the same anomalies. We believe having an arsenal rather than a single bullet is preferable in dealing with this additional complexity. The one constant in our work is the effect of human nature, which results in cycles of fear and greed that we continue to experience today.
The approach is data-intensive by design. Our stock-selection models combine often-conflicting measures of valuation, capital deployment, earnings quality and market reaction into a single expected return. We compare each stock to its peers within the global sector, within the geographic region, and finally, to all stocks across the entire market.
In our regular publication entitled "International Portfolio Strategy," we present our investment views, topical research, and a series of variables that we monitor, such as market valuation, risk premium, earnings, capital use and performance data. We also present analyses of the composition, quality, and level of corporate earnings, a framework for assessing the expected returns from valuation and trend-following strategies, an in-depth analysis of corporate capital raising and deployment, and investors' reactions to this behavior.
Our quantitative research is designed to help active portfolio managers make better decisions by exploiting recurring aspects of human psychology, which can manifest themselves in valuations and in the behavior of managements and investors. We have found these tools to be more effective outside the U.S., where markets are less efficient and there is less capital devoted to model-based trading. We leverage the experience of our team which has been creating and applying quantitative models in the U.S. since the early 1990s. Given the vagaries of operating across multiple regions, the usefulness of any single tool is dependent on the investing backdrop. There is no substitute for judgment and experience in deciding what to emphasize and when.
As part of our product offering we have international and global stock selection models and a global failure model. These tools aid in the investment decision-making process. Our international universe consists of approximately 1,500 stocks covering the developed world outside the U.S. Our global universe covers approximately 2,500 stocks and includes the stocks in our international universe as well as the largest U.S. stocks. We will deploy an emerging markets stock selection model later this year.