iQ 40 Days (Large Cap) Model
Investment Objective
The iQ 40 Days (Large Cap) Model seeks to generate long-term capital appreciation through a concentrated, systematic allocation to a select group of large-cap U.S. equities drawn from a Biblically Responsible Investing (BRI)-compliant universe. By combining momentum, technical, valuation, and balance sheet signals into a multi-factor ranking framework, the strategy aims to identify a focused portfolio of approximately 10 high-conviction holdings that exhibit superior financial quality, price strength, and fundamental attractiveness — while ensuring all holdings meet faith-based screening standards. The strategy rebalances quarterly
Investment Process
The iQ 40 Days (Large Cap) Model operates on a 3-month rebalancing cycle, drawing from a BRI-compliant universe of U.S.-domiciled equities. A size filter restricts the eligible universe to the top 40% of stocks by log market capitalization, focusing exclusively on large-cap names where liquidity and institutional coverage are sufficient. Additionally, any company that has increased its share count is excluded, eliminating stocks engaged in dilutive capital raises that may signal financial stress or opportunistic equity issuance.
From this filtered universe, stocks are evaluated across four independent factor dimensions, each functioning as a distinct ranking pass:
Momentum: Stocks are ranked by their 1-month high/low ratio, identifying names exhibiting the strongest near-term price momentum. Only those in the top second decile advance.
Technical: A 3-period Relative Strength Index (RSI) of closing prices is applied, selecting stocks in the top second decile — capturing names with confirmed short-term buying pressure and price strength.
Valuation (Earnings Quality): Stocks are ranked by their 5-year relative operating earnings acceleration, selecting the top second decile — prioritizing companies whose earnings trajectory is improving meaningfully versus history.
Balance Sheet: A solvency ratio ranking identifies the top second decile of financially sound companies, ensuring the portfolio avoids names with fragile capital structures or elevated insolvency risk.
The survivors of these four passes are then subjected to a final valuation screen, which requires stocks to have a 12-month exponential moving average of market cap above the 30th percentile — confirming sustained institutional interest — and applies two complementary value filters: an industry-relative book-to-price ranking (top third decile) and a combined screen for superior industry-relative gross profit margin (top 20%) and industry-relative cash-to-enterprise value (top 10%). The final portfolio is concentrated to 10 holdings drawn from the 85th percentile and above of this composite ranking.
The Potential Benefits of the iQ 40 Days (Large Cap) Model
The iQ 40 Days (Large Cap) Model’s multi-factor architecture is designed to identify large-cap companies that are simultaneously cheap, financially healthy, and exhibiting positive price momentum — a combination that has historically been associated with durable outperformance. By requiring stocks to pass through independent momentum, technical, earnings quality, and balance sheet screens before reaching the final valuation layer, the process creates a high bar for inclusion that naturally filters out deteriorating businesses, over-leveraged balance sheets, and stocks losing price momentum.
The large-cap size filter ensures the portfolio operates in a segment of the market with deep liquidity, broad analyst coverage, and institutional tradability.
The industry-relative valuation filters in the final selection layer are particularly powerful: by measuring book-to-price, gross profit margin, and cash-to-enterprise value relative to sector peers rather than on an absolute basis, the strategy avoids the value trap of cheapness in structurally impaired industries. The concentration to 10 high-conviction holdings ensures that only the most compelling ideas at the intersection of all factor dimensions drive portfolio returns, avoiding the dilution of alpha that occurs in overly diversified quantitative portfolios. The 3-month rebalance cycle provides sufficient time for factors to express themselves while keeping turnover and friction manageable.
What is “Biblically Responsible Investing?
Biblically Responsible Investing (BRI) is an approach to portfolio management that integrates Christian values into the investment process by screening out companies whose business activities conflict with biblical principles. Rather than investing solely on the basis of financial return, BRI ensures that capital is not deployed in support of industries or practices that are morally objectionable from a faith-based perspective — commonly including abortion, pornography, gambling, alcohol, tobacco, and human rights violations. For faith-based institutions, endowments, foundations, and individual investors, BRI reflects the conviction that financial stewardship and moral accountability are inseparable — that where one invests is as much a reflection of one's values as how one spends or gives.
Potential Risks: The strategy's concentration in just 10 holdings introduces meaningful risk — a single adverse corporate event can have an outsized impact on performance. The multi-screen elimination process, while rigorous, may at times exclude the market's strongest performers if they fail any one factor threshold, and the large-cap restriction means the strategy will systematically miss return opportunities in the mid- and small-cap segments. The BRI screening constraint further narrows the eligible universe, potentially creating sector tilts or blind spots during periods when excluded industries lead the market.