Quantitative investment approach
Insights — December 2020
Quantitative analysis is critical in the age of algorithmic investment
We use quantitative techniques to identify investment opportunities but also threats to the portfolio that are frequently imperceptible to traditional fundamental analysis. These techniques utilise big data sets and apply advanced statistical methods to identify trends and signals but also play a part in portfolio construction and risk management.
Quantitative research and analysis exists at every stage of the investment process, such as:
- Understanding market behaviour (macro indicators, capital positioning, flows and liquidity);
- Identifying new opportunities (universe screening);
- Researching companies (trends in valuation metrics);
- Scoring and quantifying ESG factors;
- Constructing the portfolio (position sizing and risk simulations);
- Trading and execution; and
- Monitoring performance and risk.
We believe quantitative analysis across the entire investment process is critically important in the age of algorithmic, computer-driven investment. We strongly believe that these insights together with our bottom-up fundamental research of companies across our key investment themes combine to provide a unique competitive advantage.