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.
Best Fit Index: S&P 1500
Investment Process
1. Define the Investment Universe:
Start with all U.S. domestic common stocks listed on major exchanges that are held by ETFs and mutual funds categorized as BRI/Faith Based.
Apply the following filters:
Large market capitalization (focus on the biggest companies).
No recent net share issuance / no dilution (only companies that have not issued new shares, indicating shareholder-friendly capital management).
This creates a high-quality, liquid large-cap U.S. universe.
2. Multi-Factor Sub-Screening
The universe is evaluated across four independent factor lenses:
Momentum — identifies stocks showing favorable 1-month high/low price signals
Technical — isolates stocks in favorable positioning using an RSI-based overbought/oversold filter
Valuation — screens for stocks with strong 5-year relative operating efficiency
Balance Sheet — filters for financial strength using a solvency ratio screen
Each lens independently ranks the universe, passing only top-tier names forward.
3. Final Composite Overlay
Surviving stocks pass through a final quality overlay applying four additional cuts: the 12-period EMA of market cap must exceed the 30th percentile (ruling out shrinking companies); stocks must rank in the top tier on industry-relative book-to-price; in the top 20% on industry-relative gross profit margin; and in the top 10% on industry-relative cash/EV ratio.
4. Output
The model selects the top 10 stocks scoring above the 85th percentile of the combined composite — the intersection of large-cap quality, positive momentum, technical strength, attractive valuation, and balance sheet health.
The Model reconstitutes every February, May, August, and November.
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.