Invesco Global Systematic Investing Study 2024

This year’s study continues to provide valuable insights into the rapidly evolving landscape of systematic investing, chronicling the latest innovations and how practitioners globally are leveraging advanced quantitative techniques across asset classes. Based on interviews with systematic investors, this research collects the opinions of senior decision-makers responsible for managing $22.3 trillion in assets (as of 31 March 2024).

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3 major trends of the study

Chris Hamilton uncovers three major trends from 2024 Global Systematic Investing Study that are relevant to Asia Pacific Investors. Watch the video to learn more. 

Highlights from the study’s four key themes

Theme 1

The first theme highlights how investors are increasingly embracing systematic strategies to build resilient multi-asset portfolios. In response to a rapidly changing investment landscape characterized by market volatility and shifting asset correlations, investors are moving towards more adaptive, data-driven approaches capable of navigating complex market dynamics. 

theme1

Figure 1 - Value of systematic techniques for portfolio construction, % citations

What systematic techniques do you think are effective for adding value during portfolio construction?

theme2

Theme 2

Theme two explores how multi-factor strategies have become the norm as investors seek to capture a broader spectrum of risk and return opportunities in a complex macro-environment. The dominance of mega-cap tech stocks is reshaping market dynamics, prompting investors to recalibrate their strategies and adopt more diversified approaches to factor allocation. 

Figure 2 - Factors targeted, % citations

What investment factors do you explicitly seek / have exposure to within your portfolio (or client portfolios)?

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Theme 3

Theme three chronicles the rising adoption of artificial intelligence (AI) in investment processes. Over half of investors now incorporate AI in some form, with applications ranging from pattern recognition to portfolio optimization. While investors see significant potential in AI, challenges around interpretability and data quality persist.

theme3

Use of AI in investment process, % citations

Do you incorporate AI into your investment process? 

theme1

Theme 4

In theme four, we find the ESG landscape is undergoing a transformation as investors increasingly demand highly customized solutions to meet their unique sustainability objectives. Systematic approaches have emerged as the vanguard of this evolution, offering the flexibility and scalability required to create highly tailored ESG strategies. 

Figure 4 - Advantages of systematic approach to ESG, % citations

What are the advantages of a systematic approach to applying ESG?

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  • The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

    Factor investing (as known as smart beta or active quant) is an investment strategy in which securities are chosen based on certain characteristics and attributes that may explain differences in returns. Factor investing represents an alternative and selection index-based methodology that seeks to outperform a benchmark or reduce portfolio risk, both in active or passive vehicles. There can be no assurance that performance will be enhanced or risk will be reduced for strategies that seek to provide exposure to certain factors. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Factor investing may underperform cap-weighted benchmarks and increase portfolio risk. There is no assurance that the investment strategies discussed in this material will achieve their investment objectives.

    Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. An issuer may be unable to meet interest and/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer’s credit rating.

    In general, stock values fluctuate, sometimes widely, in response to activities specific to the company as well as general market, economic and political conditions.

    The use of environmental, social and governance factors to exclude certain investments for non-financial reasons may limit market opportunities available to funds not using these criteria. Further, information used to evaluate environmental, social and governance factors may not be readily available, complete or accurate, which could negatively impact the ability to apply environmental, social and governance standards.

    There are risks involved with investing in ETFs, including possible loss of money. Index-based ETFs are not actively managed. Actively managed ETFs do not necessarily seek to replicate the performance of a specified index. Both index-based and actively managed ETFs are subject to risks similar to stocks, including those related to short selling and margin maintenance.

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Read the Invesco Global Systematic Investing Study
Explore the drivers of systematic investing, investor experiences, and methods of implementation.
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