Data, information, insight, and action are guiding principles for quantitative investors, reminders of what we should be spending our time on.The flow of these concepts matters – because raw data can lead to informed decisions.
The sheer volume of data handled in these calculations means that simple tools like Microsoft Excel won’t cut it. Therefore, the idea of a single source of truth also means that data is not being transferred between team members using files that can be easily modified. An example of this is our work on identifying a global cycle indicator, which is automatically updated to provide insights for portfolio positioning based on the current economic phase that the indicator points to.
Portfolio positioning decisions can be taken after distilling large amounts of information in a fast and accurate manner, with the systems able to be modified in any way necessary for producing market-beating returns in our portfolios. This process is style agnostic, meaning that the fund isn’t married to one particular style, rather tilting toward or away from varying factors depending on the forecasted return drivers.This highlights the need for a dynamic approach to factor investing.