Max Capetta, CEO of Redpoint Investment Management, writes for Money Management.
Quantitative investors research and use a range of disciplines to determine which stocks are worth acquiring and, importantly, those which are not worth buying.
These range from longer-horizon, financial statements-based disciplines such as valuation, quality, sustainability, and growth, through to shorter-horizon strategies that aim to capture investor sentiment, company news and market events. This differs from a traditional fundamental approach which usually focuses on just one style or investment discipline.
Both traditional and quantitative approaches are founded on a belief that investment strategies can be built to outperform passive approaches; a quantitative approach relies on breadth. By accepting that no one investment discipline is consistently rewarded, a quantitative approach will seek a broad range of inputs.
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The views expressed are her own and do not consider the circumstances of any investor.
