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Decision-Making Process

Investment Universe

We begin with every stock that trades on a major exchange in developed, emerging, and frontier countries worldwide. After screening, we end up with an investment universe of companies that are seasoned (no IPOs), suitable (no funds or bankruptcies), and liquid (enough to trade). Our strategies draw on all or parts of this universe.

Peer-Group Classification

Our research shows multi-factor valuation to be most productive when relative value is assessed on a peer-group basis. We divide our universe by sectors, industry groups, and regions that reflect statistical and fundamental economic relationships among stocks. For global strategies, we consider the global influence on a stock’s valuation to enhance the peer comparison.

Industry Peer Groups

Our U.S. strategies use the GICS-based, AJO-customized industry groups below,
while our non-U.S. strategies use standard GICS industry groups.

GICS SectorsAJO Industry Groups
Communication servicestelecommunication services, media, entertainment
Consumer discretionaryspecialty retail, consumer services, internet/catalog retail, motor vehicles, consumer durables/apparel, household durables
Consumer staplesfood/beverage/tobacco, household/personal products, food/staples retailing
Energydrilling, exploration/production, equipment/services, consumable fuels
Financialsdiversified financials, insurance, life insurance, banks
Health carepharmaceuticals, biopharmaceuticals, biotechnology, health care equipment/services, managed health care/facilities
Industrialsaerospace construction/conglomerates, machinery, transportation, commercial/professional services
Information technologyhardware/electronics, software, IT services, semiconductors
Materialsgold/precious metals, other materials
Real estateREITs, real estate management/development

Region & Country Peer Groups

Our non-U.S. strategies are further divided by region and country.


We use peer groups to eliminate structural bias across groups; however, for certain factors that measure change, differences between groups are episodic, indicating opportunities we might exploit.