We don’t just use quantitative investment strategies; we’re convinced they’re the undeniable path forward for the entire Investment and Asset Management landscape. The power of systematic investing is only just beginning to be unlocked, and we’re leading the charge.
The evolution of the Investment Industry
While it remains true that most of the assets are managed by discretionary Portfolio Managers, the rise of Quants has brought additional opportunities to all investors on the market. Despite persistent claims that systematic funds lag behind discretionary funds, or merely ride established risk factors without true alpha, empirical evidence tells a different story.
There are several compelling reasons to believe that the future of quantitative investment strategies is brighter than ever:
- Technological advancements. While quantum computing might be the most exciting frontier, the continuous march of computing power and technological infrastructure across the board is a game-changer. These advancements consistently enhance what’s possible for systematic trading, a pace of progress that’s simply hard to match in traditional discretionary trading.
- Data processing advancements. The data revolution isn’t just starting; it’s in full swing. Systematic investment companies are constantly looking for additional data sources and providers, in order to gain an edge with alternative data strategies or to improve their data pipelines. This inherently gives a larger advantage to systematic investments over discretionary ones, since machines can analyze data and extract invaluable insights much faster than humans, and with fewer errors.
- Democratization of investment and trading. What years ago seemed a complicated and unclear domain, reserved to Wall Street’s elite is now common knowledge for many. This expands the public who might be interested in something they could not achieve by themselves.And while this will benefit discretionary investors too, it particularly fuels the systematic side, as quantitative strategies are gaining significant traction and demand, especially among institutional investors.
- Evolving skillsets. There is a clear educational trend: students and future professional are learning much more than ever to code, write formulae, and invest using systematic and data science models. The approach is transitioning already: classic financial models such as the CAPM and discounted cash flows are are essentially obsolete.
Challenges in Quantitative Investment Management
It is not all gold that glitters. Not all investment strategies are the same, and no quant company is the same. There are some challenges ahead for the quant world: smarter data consumption, faster machine learning calculations, refining the research process and avoiding backtest errors. Some suggestions from the best practitioners always help. There’s a critical gap often observed among individual traders: the lack of a structured investment process and a definitive framework for pinpointing promising strategies. Elements that are fundamental to successful quantitative investment management.
How We Stand Apart
Unbiased Alpha sets itself apart through a meticulously designed and highly adaptable approach to building algorithmic trading strategies and fully functional trading bots. Our solution is engineered not just to enhance operational efficiency and overall performance for businesses but to fundamentally optimize their investment journey by fully exploiting data insights and consistently outperforming both discretionary peers and non-scientific competitors in the market.
A core differentiator of our methodology lies in its inherent modularity. It is our design philosophy: to ensure maximum flexibility, allowing each component of a trading strategy to be swiftly substituted, enabling rapid modifications, the creation of entirely new strategies, or seamless transitions to trade with different exchanges and asset classes.
The features of our approach and software rely on an approach that differentiates each stage of a trading strategy.
- Data Sourcing and Integration: spending an unbelievable amount of time on data sourcing and integrating multiple data sources, we built a strong, robust, consistent API to ensure data stability, consistency, integrity and cost-effective handling. All of this for a fraction of Bloomberg Terminal and its peers.
- Trading Signals: module indicating the direction and conviction of a trade in one or more assets at the same time, including baskets of assets. Moreover, we built our own signals that come from highly proprietary, unprecedented data sources.
- Asset Allocation: not all signals and assets should necessarily result in an equal portion of your capital.
- Execution Management System: executing strategies requires liquidity monitoring, market impact modelling and transaction costs control.
- Risk Management System: an investor’s worst enemy is risk. To keep it under control, and detect exceeding exposure to one or multiple factors (market risk, counterparty risk, liquidity risk, and more), a dedicated module is required.
- Universe Filtering: not all assets are attractive at all times. Filtering the universe without survivorship bias is a crucial step that requires a separate process in your investment strategy.
- Data Science routines: to ensure robustness and reliability, any data science model will require proper data preprocessing, meaningful and attentive modelling, consistent validation and effective testing. This pipeline is managed agnostically to the model and data used.
Moreover, our currently existing framework supports a constantly increasing number of brokers and exchanges, favoring those who provide robust, production-ready APIs and flexible coding, potentially allowing us to trade across multiple platforms. As important as monitoring is also custom logging and messaging through channels such as Telegram, to ensure a constant update to optimize error and underperformance handling.
The Right Time Is Now
Many investors, traders and companies ask themselves “When should we start?” and spend time and efforts trying to pinpoint the perfect moment to build their strategies. But those who are familiar with the investment world know that timing the market is impossible, and this time is no different: the only correct answer is to act now.
The paradigm is changing, and Unbiased Alpha is leading it.