KDM Capital LLC is a Factor Based portfolio manager focused on an alternatively weighted approach to creating investment portfolios. Unlike traditional products weighted by market capitalization, KDM constructs portfolios using targeted factors such as : momentum, size, quality and low volatility. Academic research has shown, ex-post, that factor risk premia represents a valuable source of returns that active management can exploit relative to a passive rebalanced benchmark. Diversifying across various factors can and has provided a more consistent way of beating a traditional benchmark.
A unifying attribute of 'Factor' strategies is that they exploit a simple fact: market capitalization–weighted strategies weight every stock that is currently overvalued (hence, destined to under perform in the future) in the portfolio above its fair-value weight, and underweight every undervalued stock.