The quantitative investing industry was previously poised to sink deeper into tough markets. Corporate Debt When Private equity Shake up territory dominated by human financiers, according to Sandy Latley of Man Group.
Investment director of a retired UK hedge fund After spending 30 years in the industry, later this year, despite the ups and downs of his career, he says that “the invasion of quants in the management of fund was unstoppable ”.
Over the next decade, Rattray said there will be quants who use systematic data and computer models to make investment decisions and gain more space in the long-standing financial industry. paddy field. Dangerous ground For algorithmic strategy.
“The market is highly quantified in almost every area and it will likely continue. There are a few reluctant, but eventually they will fall, ”he said in an interview with the Financial Times. Said. “People in the financial industry seem to think it’s kind of exceptional, but it’s just another industry, and all industries will be much more tech and data driven.”
The crown jewel of the Man group is its systematic computer-powered AHL unit, and assets under Rattray’s control have grown from $ 11.9 billion at the end of 2013, when he took over as CEO, to 50.7 billion. billion dollars this year. In 2017, he became CIO of the entire Man Group, helping the group reach a record total of $ 135 billion in assets under management.
Rattray joined Man in 2007 and was previously one of Goldman Sachs top equity derivatives strategists. He therefore led the redesign of the Vix volatility index to create derivatives based on the “fear gauge”. This made him one of the most famous names in the industry. “Sandy is a quantitative,” said Mark Anson, director of Commonfund, a nonprofit investment group that manages $ 26 billion on behalf of foundations and charities.
One of the biggest changes in Rattray’s career was the speed and cost of transactions, which were broader. The investment industry takes a more quantitative approach. “Twenty years ago, if you were to talk to a fund manager about the profit return factor, they would see you as if you had two heads,” he said. ..
The next two corners of finance to feel the invasion of quants Corporate bond market Where systematic strategies are starting to spread, and private equity is predicted by Ratley.
“If I still have time, I think it’s a good place to be a PE. Private equity was a big tech advocate, but they’re as tech-savvy as you can imagine in their business. No, ”he said.
Private equity investing is robust and it can be nearly impossible to systematize an un-traded market, but there is still a lot the buyout industry can learn from the quantitative world, Mann said. The IOC insisted.
“Capital managers are freed from the tedious work of many manuals by letting algorithms do it, such as modeling companies, collecting peer data and analyzing industry trends,” he said. .
This example is a large database created by ManGroup. Business to Business Relationships You can see how the news travels throughout the supply chain around the world. “It was incredibly useful in the public market, and it would be incredibly useful in the private market,” Latley said.
For the quantum industry itself, he wonders how far the next big frontier will improve. Machine Analyzes Text Another area of artificial intelligence that is harnessing the potential of machine learning, not just numbers.
Rattray The amount of text data is exploding and machines are gradually improving to sift it for profitable business models. “They’re okay with it today, but the next frontier is that they’re really good at it,” he said. “Machines can’t read bond leaflets like humans do, but they can eventually, and when they do, the good news is they’re bored or bored reading them. It means you don’t. “
Machine learning is one of the most publicized areas of the financial industry, and Rattray acknowledges that Man Group has had both successes and failures in this area. The machine learning strategy is the market turbulence caused by Covid Last year he remained “absolutely confident” that it would play a major role in future investments.
“So far it’s a very simple linear model, and the market is not linear,” he said. “I think there is still room for a better model, but it’s usually a bunch of progress and then something’s wrong.”
Another area that has changed dramatically since Rattray began his career is how people with science and computer backgrounds are paid over the jokes of wealthy investment bankers and traders. Is it? “Thirty years ago quants weren’t well paid, but now they’re making as much money as possible,” he said.
Nonetheless, Latley left his post to pursue a degree in architectural history and nurture a passion for Scandinavian modernism. “It’s a way of stretching my mind in another direction,” he said. “So I don’t know what to do. If you don’t have enough imagination, you might recover financially, but that’s not a plan.
Credit and PE are ‘next frontiers’ for quants, says Man Group IT director Credit and PE are ‘next frontiers’ for quants, says Man Group IT director