As technology advances, so do the opportunities for quantitative investors. By incorporating more data and leveraging advanced modelling techniques, we can develop deeper insights and enhance decision-making. That is how we aim to deliver better investment and sustainability outcomes to meet our clients’ goals.
Join the evolution
Investing has always been driven by a race for information and insight. It is a race that still requires innovation and for every investment decision to be research-based. What has changed is how people find the information, and how they interpret it. Along the way quant investing was born, generating enhanced risk-adjusted long-term returns to help clients meet their financial goals.
Innovation also led to sustainable investing, as financial goals evolved to include the wellbeing of the planet and its future generations. And today, the evolution of quant investing is following a path shaped by the significant gains in computing power and its accessibility, the big data deluge, and growing prominence of advanced modeling techniques. These developments are unlocking new opportunities by allowing quant investors to go to new places and gain new insights into risk, return and sustainability.
Evolution, not revolution. Innovation is imperative.
Volume of data created and replicated worldwide
Source: International Data Corporation (IDC), Global DataSphere Forecast, 2021-2025
Over the past few decades, Robeco has consistently leveraged technological advancements to push the boundaries of quant investing. In 2010, for example, we started incorporating alternative data and faster signals into our short-term stock selection model. Embracing developments in non-traditional data and advanced modeling techniques, therefore, fits perfectly with the evolution of our quant approach.
Incorporating more data and leveraging powerful analytical tools
Alternative datasets offer untapped potential by providing valuable insights for investors looking to gain a competitive edge in the market. These unconventional sources of information include elements ranging from credit card transactions, audio from earnings calls, geolocation information, to textual data from news filings. For quant investors, this treasure trove of information can elevate the efficacy of investment strategies when skillfully integrated.
Machine learning (ML) gives quant investors an extra toolkit with which to explore and delve into economic problems and identify patterns within data. The flexible and powerful framework of ML can uncover nonlinear relationships between variables as well as shed light on their interactions. This can be incredibly valuable for quant investors when constructing return signals, risk models and portfolio construction algorithms, for example.
Natural language processing
Natural language processing (NLP) revolutionizes data analysis, decoding spoken words and texts at an unprecedented pace and scale. While fundamental analysts examine broker research notes, analyze company reports, and meet with management teams to glean insights, quant investors can now perform similar tasks using NLP, such as sentiment analysis. In this transformative landscape, tools like ChatGPT provide nuanced and in-depth interpretation of language, bridging the gap between data and insight.
Aiming for better investment outcomes
The big data revolution and rising prominence of advanced modelling techniques is providing the runway for Robeco quant investors to deliver better investment outcomes for our clients. This allows us to build on more than 10 years of using innovative signals by further advancing our existing quant strategies, developing cutting-edge solutions and widening the scope for customization.
Research lies at the heart of everything we do and has been in our DNA since our foundation in Rotterdam in 1929. This plays a key role in fostering an innovative nature and a pioneering spirit that is required to develop superior solutions. It all starts with a solid foundation.
That is why we took a thoughtful and intentional approach to incorporating alternative data and advanced techniques into our research and investment strategies. We began by prioritizing the development of cutting-edge, cloud-based infrastructure, which enables us to consistently and effectively use these datasets and tools. With this foundation in place, we are also able to smoothly integrate ML or NLP models into both new and existing strategies.
Meet the team
Our diverse team has a unique blend of deep domain knowledge and expert technical competency rooted in our pioneering approach to both quant and sustainable investing. This is underpinned by our unique culture which values clear communication, transparency and a flat structure that rewards high-quality research.
This fosters a culture where independent thinkers are empowered to challenge conventional wisdom and spark new ideas. By embracing this spirit of healthy competition, we are able to continually innovate and drive our research agenda forward, in alignment with our investment philosophy based on sound economic rationale, strong empirical evidence and a prudent approach.