The last decade has seen the popularity of active systematic strategies wane, partly because of the strength of market beta, as well as institutional investors’ growing taste for private assets. CAMRADATA’s latest whitepaper, Systematic Investing explores how systematic managers have survived and what the future may hold for this approach.
The whitepaper includes insights from firms including AQR Capital Management, Deuterium Capital Management, Mackenzie Investments, Aon, Lane Clark & Peacock, Mercer and Pool Re who all attended a roundtable recently hosted by CAMRADATA.
The first nine months of 2022 left most investors few places to hide. Both bond and equity markets have shed value, and while real assets have not manifested similar levels of pain, with interest rates set to rise and recessions expected, no one presumes they are immune from suffering.
The report begins with a look at whether systematic managers and consultants on the panel have done better than average following months of general losses, and the different strategies they have used for dealing with the volatile economic conditions including extreme inflation.
It moves on to consider the asset owner’s perspective on the role of systematic strategies – which are supposed to make money in all markets – within a total portfolio, before discussing the reclassification of alpha as beta when it comes to sources of returns.
The report then looks at advances in technology and how systematic investors are using it to improve their investment management, before ending with a discussion around how investors cope with the occasional irrationality of financial markets.
Natasha Silva, Managing Director, Client Relations, CAMRADATA said, “Both systematic and fundamental managers of public securities have seen their portion of the pie shrinking as a result of cheap trackers and the bull market that ultimately got the better of smart beta. However despite these challenges, some systematic managers have proven their worth as alternatives within and across asset classes.
“Many of these houses have their foundations in the hedge funds of the 1990s – an era when rare and niche strategies first crossed over into institutional investors’ portfolios. The success of those that have endured and evolved has rested on the ability to demonstrate genuine diversification and breadth.
“Whilst every investor has been tested this year; the latest in an extraordinary start to the decade our latest whitepaper focuses on how systematic managers have fared in recent years and how they are positioned for the years ahead.”
The whitepaper also includes three opinion articles from the sponsors:
- AQR Capital Management – ‘New Rules of Diversification’
- Deuterium Capital Management – ‘US equities are fairly valued and major non-US markets are very undervalued’
- Mackenzie Investments – ‘Mackenzie Global Quantitative Equity: Emerging Markets Equity’
To read the Systematic Investing whitepaper, please click here.
For more information on CAMRADATA visit www.camradata.com.
