The GMO Global Equity Extension Strategy seeks to deliver high risk‐adjusted returns by capturing both the positive and negative views of GMO’s proprietary alpha models, investing in both developed and emerging market equities. The Strategy aims to have a beta of 1, with benchmark-relative performance driven primarily from bottom‐up stock picking. Leverage in the Strategy will typically result in a gross exposure of approximately 160%: 130% long and 30% short.
The Strategy’s investment approach is grounded in the Global Equity team’s belief that, in the short term, equity markets exhibit exploitable inefficiencies as a result of irrational investor actions, the imperfect flow of information, and the participation of non-economic actors, while in the long term returns are ultimately driven by economic reality. The Strategy aims to take advantage of this inefficiency by utilizing a multi-factor valuation model in conjunction with other methods, such as cross-asset signals and corporate alerts, to identify mispriced equity securities.