Quantamental investing: The best of both worlds

Thomson Reuters

By Zachary R. Sheffer

November 29, 2017

Quantamental investing, which combines the best of fundamental and quantitative strategies, is redefining how asset managers handle their portfolios.

Systematic investment strategies driven by big data, machine learning and advanced analytics have become the toast of Wall Street in recent years.

Just look at the hedge fund industry in 2016 when investors lost confidence and pulled out US$70 billion, only for quantitative funds to add $13.3 billion in new money amid the turmoil.

And on the day after the United Kingdom voted to leave the European Union, hedge funds on average were down 0.18 percent compared with trend-following machine-based strategies which gained 0.71 percent, according to industry tracker Hedge Fund Research.

Advances in technology and access to massive data sets have opened up new possibilities for seeking alpha; possibilities that never even crossed the minds of fundamental investors.