quant Group
quant Group was born more than a decade ago, as a financial services platform in the midst of the 2008 Global Financial Crisis, with two simple yet powerful guiding mantras – ‘Being Relevant’ and ‘Predictive Analytics.’ The guiding philosophy of ‘Being Relevant’ means that in a dynamic and volatile world, to remain relevant, and to preserve and grow wealth, the test of time must be passed every day by continuously updating knowledge and innovating on systems and processes. This is enabled by ‘Predictive Analytics’: an all-encompassing framework for understanding and forecasting markets, across assets and geographies.
Over the last decade, quant Global Research (qGR) has created a formidable suite of analytical indicators and formulated the multi-dimensional VLRT framework
Incorporated in December 2007, the firm started its operations in May 2008.
quant | Investment Principles
Measurable is reliable
For success in investing, discipline is of more importance than any other attribute of the investment process. Our battle-tested suite of proprietary valuation, liquidity and risk indicators along with extensive financial modelling ensure that we consistently deliver superior results.
Quantamental investing
While measurable is reliable, we also believe the economy and markets cannot be captured completely by models and indicators. Human judgement that comes from years of trading and investing experience has immense value. For optimal results, our decision-making seeks to find the harmony between objectivity and subjectivity.
Multi-asset, multi-manager
We believe that safeguarding investor wealth is paramount. Apart from reducing risk by investing across asset classes, we take diversification to another dimension by ensuring every investment decision comes from a focused discussion between investment managers with a diverse set of capabilities and experience.
Money flows from one asset class to another.
Money is a form of economic energy – the quantification of human effort. As the world evolves, a dynamic set of ideas continuously lead the change. Money flows and grows with these pioneering ideas. Identifying them and the specific assets that benefit is the surest and most consistent method for generating wealth.
Timing is everything
In our framework, time is a critical aspect of investing as the three dimensions of Valuation, Liquidity and Risk interact and move together in cycles across different periods. Alpha generation is optimised only by sanguine identification of the extremes.
Introduction to quant Global Research (qGR)
Bringing Diction To Prediction
Founded in 2008, quant Global Research (qGR) is the thriving heart and inquisitive mind that energizes and guides the quant Group platform. qGR is driven by a simple idea: to extract predictive clues on market trends, it is critical to look beyond the obvious. Multiple data points outside the popular domain must be collected and synthesized into investment decisions using alternate analytical methodologies, as only differentiated research can lead to novel insights. A truism for all markets is that when everyone has found the key, the lock has already changed. Explore the unexplored. While following convention and staying with the herd may feel comfortable, markets do not follow what is written in textbooks.
A decade ago, market research was focused primarily on the financial statements of a company, industry analysis and macro-economic studies to some extent. qGR began with a different idea about research with a focus on financial markets and the real economy as interlinked with feedback mechanisms, and a large emphasis on the role of investors’ dynamic behavior. This idea evolved into a multi-dimensional research perspective which is now formulated in our VLRT framework.
The ‘multi-dimensional’ aspects comes in because in addition to conventional qualitative analysis, qGR is extensively focused on quantitative measures and indicators of market patterns and various cash and derivatives market attributes. These diverse variables provide a picture of the inner workings and changing structure of various markets which form the ‘financial economy’. For the real economy, while formal economics is largely theoretical with assumptions-based models, qGR focuses on empirical market analysis, discovering a multitude of interlinked, overlapping though independently-driven cycles based on extensive historical data, going back centuries in some cases. Apart from cycles, pioneering research on global liquidity through alternate data sources enables quantification and tracking of the flow of money and its consequences across markets and asset classes.
Going further, qGR behavioral analytics identifies the risk posturing of market and economic participants. The collective appetite of businesses and investors helps categorize the economic and market environment in zones of risk loving, neutral and risk aversion. Sentiment clues are also computed through proprietary risk indicators that enable us to quantify varying levels of fear and greed. Granular analysis specific to sectors or individual companies is also performed by identifying bouts of euphoria and panic.
Along with research, qGR provides a unique ‘Adaptive Asset Allocation’ execution methodology for money management. The various models, indicators and cycles are continuously being observed as they change with the market environment. Investment calls are triggered by certain observations in any one of the components, following which the call evolves based on further evidence from other relevant components. This endows our money management with an adaptive ability which we believe is the source of outperformance. There is no search for a Holy Grail, it is about applying simple and time-tested market logic through a multi-dimensional lens.
“quant’s indicators are unique in their ability to condense multi-dimensional research into a one-dimensional single number. Our typical day starts with quant Risk Index, one metric that encapsulates risk across markets and across assets. The challenge has been of marrying momentum with qualitative research, and assimilating various macroeconomic variables and time series data with cross-sectional data. It has worked well for us and we hope to continue our best efforts in that direction.”
– Sandeep Tandon
Investment Framework
V-L-R-T
Being Relevant with ‘predictive analytics’
The core engine that drives us and sets us apart is a robust and differentiated investment framework that enables us to see beyond the horizon and stay relevant. Our unique analytical framework for enabling ‘predictive analytics’ encompasses all available asset classes and sectors, formulating a multi-dimensional research perspective.
Why multi-dimensional?
The markets are a complex, dynamic system. There is no one formula or strategy or perspective that can consistently outperform.
A diverse set of variables and participants are continuously interacting with each other in myriad ways.
In the face of this uncertainty and complexity, instead of limiting ourselves to any one school of thought we have found consistent success by studying markets along four dimensions: Valuation, Liquidity, Risk Appetite, and Time. [VLRT Framework]
Valuation: Knowing the difference between price and value.
Liquidity: Understanding the flow of money across asset classes.
Risk Appetite: Perceiving what drives market participants to certain actions and reactions.
Time: Being in sync with the waves of value and behaviour
Looking Beyond the Obvious
As Niels Bohr famously remarked, ‘it is very hard to make predictions, especially about the future”. Any market participant, whether a value investor or a day trader, would more or less agree with this statement. They would also agree that the task becomes exponentially more difficult with cross-asset, cross-market forecasts. As we go further out into the future, the cumulative amount of relationships and independent attributes that need to be analysed and predicted almost approach infinity.
Yet, an honest attempt must be made and the analysis that we present to you here is the result of just such an attempt. A decade ago, we started out with a vision of the future that was substantially different than the prevailing perspective at that time. It gives us great pleasure to note that the past decade has seen the materialization of a substantial part of that thought process. To be honest, several mistakes have also been made but they are cherished by us even more as they helped us refine our tools and framework. At the same time, the diversity of research that we have covered has seen immense growth.
Now, at a crucial moment in history, we have formed another vision of the future after meticulously connecting the dots across a broad spectrum of phenomenon. We present here glimpses of that picture while being fully aware that it may not materialise completely. However, the glimpses we present here can serve as a rough map to navigate the uncertain future. The coming decades will be chaotic and overturn most of the commonly held beliefs and systems that we are accustomed to. Being prepared is the least we can do.
Words without action mean much less, of course, which is why we have embarked on a new journey with the launch of our money management business (quant Mutual Fund).
We believe it is the right time to test our philosophy, put on the glasses of our VLRT framework and implement the ‘Adaptive Asset Allocation’ methodology.
In a dynamic world, it is not just a choice but a necessity to adopt a multi-dimensional view.
We believe that alternate perspectives such as behavioral finance, volatility analytics and earth changes along with liquidity analytics are going to become more and more important.
The world is becoming non-linear and parabolic and to stay relevant, money managers must think with an unconstrained mind, actively update their methods and earnestly search for absolute returns, considering all markets and asset classes.