Investment Insight
Quantamental investing: The future is now
 
 

Investment Insight

Quantamental investing: The future is now

 

MAY 2018

In their quest for new ways to generate alpha, investors continue to pump cash into factor and quantitative-based strategies. Quant Investing–Bridging the Divide,1 an article that explores the trend, says the pool of assets in these strategies has surged to US$1.5 trillion and is growing at a rate of 17% annually. Applied Equity Advisors have been adherents of factor-based investing for 15 years, but we find it works best when supplemented with traditional stock selection.

Investors are embracing factor-based and quantitative approaches because they have delivered excess returns. Research shows that, over the past 20 years, broad market factors—such as valuation, growth, quality and momentum—have driven about 65% of a global equity manager's relative returns.2

 
Head of Applied Equity Advisors Team
 
 
Executive Director
 

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1“Quant Investing – Bridging the Divide”, Morgan Stanley Research, October 1, 2017.

2Morningstar, Rolling 18-month regression for Global Equity Managers, December 2015. Returns are net-of-fees based on mutual fund NAVs.

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