Qualitative vs Quantitative: An exact science or a matter of opinion?
Traditionally, fund managers have used a qualitative investment process, drawing predictions from their direct experience investing in markets. This results in inherent bias in their investment style. Outcomes are influenced by the inevitable pitfalls of this subjective investment process rather than a scientific and objective evaluation of data.
The results from qualitative managers can be impressive but the probability of anyone predicting a particular manager’s success, from the hundreds of available qualitative managers, appears to be no better than chance.
Quantitative investing is based on the theory that mathematical relationships exist between economic data such as interest rates, GDP and inflation, along with assets such as stocks, bonds, commodities and property.
Quantitative fund managers identify these relationships using sophisticated mathematical models called algorithms and develop investment strategies that have a higher probability of success. Algorithms are not new technology but what is new is the possibility of taking advantage of their predictive capability within the investment world for the retail investor.
Sensible investment planning is based on understanding your investment aims, as well as your time horizon. When considering an investment strategy, this will take into account your objectives and attitude to risk. Advanced Asset Consultants will help you determine an investment plan appropriate for your needs.
Friday November 02, 2018
“A goal properly set is halfway reached”. Zig Ziglar The key to building wealth Our life is an endless series of daily choices, and how we manage those choices determines the outcome of our life. We all want financial freedom, but how will we achieve it? Financial goal-setting is the key to building wealth. There …
Saturday June 30, 2018
Traditionally when retiring an annuity was purchased providing income throughout life providing longevity protection with over 700,000 pension holders accessing their pots, 17% of which have purchased some form of an annuity, not that surprising I hear you say. However, annuities purchased from existing providers (clients not using open market option) are still hovering around …
Monday April 30, 2018
There has been much discussion within the financial advice sector on the term “insistent client” ever more so with regards to Defined Benefits transfers and how this should be approached. Let me nail my colours to the mast from the outset. There is no place for “Insistent client” within the Financial Planning Profession for the …
Monday March 19, 2018
Don’t let global uncertainties affect your financial planning for the years ahead. The overall direction of developed stock markets is a relentless and continual rise in value over the very long term, punctuated by falls. It’s important not to let global uncertainties affect your financial planning for the years ahead. Individuals who stop their investment …
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