Stockholm (HedgeNordic) – While the Nordic region braces itself and prepares for a long period of summer hibernation, at HedgeNordic we are wrapping up our final pre-summer special report, this one on systematic strategies, before we too, head out to work up a fashionable tan.
Over the years, two main approaches have evolved in active management: systematic and discretionary investing. To put it simply: systematic (often associated with the term ‘quant’) generally applies a more repeatable and data-driven approach, relying on computers to identify investment opportunities across many securities. A discretionary approach, in contrast, typically involves in-depth, human brain and hand-on analysis across a smaller number of securities and relies more on information that is not always easily codified.
The terms ‘systematic’, ‘quantitative’, and ‘rules-based’ are often used interchangeably and fade into another in some shades of grey. They, arguably, represent an investment approach that is often perceived to be in direct opposition to what a ‘fundamental’, ‘discretionary’ or ‘stock-picking’ approach may be.
While it may be fair to contrast systematic and discretionary approaches, they by no means are necessarily opposites. Indeed, both systematic and discretionary managers pursue the same objective and both can be fundamentally-oriented. In fact, they can often use very similar inputs, but in different ways, to try and achieve the singular goal of improving investment performance.
Our “In Focus” section of the magazine lies on machine learning, and artificial intelligence, two segments that are playing an ever increasing role in quant driven strategies, asset management and our lives as a whole.
The report features articles from David Harding at Winton Captial, where we visit his 1994 (!!) paper “Making money from mathematical models”, the potential conflict of “Technology and Responsibility” by Transtrend´s Harold De Boer, Katy Kaminski takes a look at “CTA Style Evolution”, Martin Källström talks about Lynx´ soon to be launched AI/ML driven fund in “The journey towards Constellation”, with Aspect Capital we discuss how “Alternative Data and Macro Trading” come together, IPM discusses if a systematic or discretionary approach is more promising for a macro strategy. We investigate how artificial intelligence is applied to FX trading with a new Swedish team, Century Analytics, while Gernot Heitzinger of smn takes “A Long-Term Perspective on Systematic Trend Following” and we investigate “How AI Can ShapeFund Marketing And Help Boost AuM” – next to many other interesting topics.
Wishing you a relaxed and happy summer, with some easy reading!
You will find the report here: Systematic Strategies