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Glossary

Rules-Based Investing

Rules-based investing means following a predefined, explicit set of criteria to make decisions - rather than discretionary, case-by-case judgment calls. It removes emotion and inconsistency from the process and makes a strategy easy to test, tune, and repeat at scale across an entire universe of stocks.

Related terms
Universe (Investment Universe)An investment universe is the full set of stocks under consideration for a given strategy - for example, the S&P 500, the NASDAQ 100, a sector index,...RIA (Registered Investment Advisor)An RIA is a firm or individual registered with the SEC or state regulators to provide investment advice for a fee, held to a fiduciary standard....Scoring ModelA scoring model assigns a numerical score to each stock in a universe based on a weighted combination of factors - such as valuation, growth, quality,...Return on Invested Capital (ROIC)ROIC measures how efficiently a company turns the capital invested in it (debt plus equity) into profit. A consistently high ROIC, especially relative...
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