Systematic Investing

The idea of systematic or quantitative investing comes from the insight that emotions can hinder success in investing. Systematic strategies look for evidence about certain characteristics of securities which explain part of their risk or returns, so-called factors.

In a systematic approach, investment portfolios are constructed by analysing a big variety of data to understand economic and company trends.

Data can come from fundamental data on companies such as balance sheet items, price signals or alternative data sources such as credit card data, NLP analysis of earnings calls or even the coverage of analysts.

These insights can be used to construct portfolios based on client needs and risk profiles.

A factor is a quantifiable characteristic of a stock. A multi-factor investment approach invests in a group of stocks with similar characteristics. For example, this could be low P/E ratios, low volatility, high dividend yields or low market capitalisation.

Our team focuses on the factors - value, momentum and quality. In the value factor, we examine stocks are examined that have attractive valuations. Momentum looks at the price and or earnings dynamics of a stock. In the quality factor, we examine the balance sheet strength, management and profitability of a company.

The importance of portfolio construction is often underestimated even by experienced quantitative investors. People tend to focus on the data (the machine of your racing car) but this does not help if that car has no wheels. Portfolio construction is similar: our portfolio construction is designed to transfer as much of our research insights into the portfolios while focussing on strict risk controls and a state-of-the-art management of transaction costs.