Like all of our research, quantitative analysis must adapt to the investment cycle.
Quantitative research involves screening the available universe of collective investment schemes to short list funds that may be of interest. In addition, quantitative research helps to identify underperforming assets.
The screens used will change throughout the investment cycle. During periods of momentum, short term analysis can be more relevant than longer term performance. However, during periods of inflexion it may be more important to look at historic periods of change to understand how the manager’s style performed or how it changed.
Our analysts will not be content with peer group performance alone. We wish to understand the drivers of performance.
Analysts will seek to ascertain whether asset or sector allocations have driven performance or if stock picking appears to have been the driving force.
We wish to understand how consistent performance has been and whether conviction decisions led to periods of brilliance or if the manager has consistently added value through more numerous but lower conviction decisions.
To truly understand a collective investment scheme analysts must be prepared to explore much more than performance.
Qualitative research is aimed at understanding the structure and processes employed by a manager.
Analysts seek to understand how the structure and processes lead to performance and where the style is more likely to add value.
In addition, qualitative research focuses on potential risks. We want to ensure that robust procedures are in place to minimise the risks posed to investors.
This process starts with a request for information which will provide the analyst with an overview of basic information including manager experience, processes and controls.