Quantitative investing, the method of using mathematical models to statistical computations to make financial asset trading decisions, has grown to a market size just north of $1 trillion. Heavily utilized by central banks and governments to find opportunities in variable data outputs, the extent of its reach goes beyond what many investors on the street realize says global head of investor relations Gareth Henry. Follow Gareth Henry on medium.com
Out of every 10 high performing fund type firms. 6 of them rely on quant techniques to track insights and make a number of lightning speed transactions. An astounding 90% of share volume within the public markets in the United States is traded using quantitative methodologies. A Global Algorithmic Trading Market Report revealed the fact that this practice is quickly gaining traction across both developed and emerging markets.
Gareth Henry recently revealed the origins of quantitative analysis. The strategy has its roots in program trading, a previously fringe way of market participation that yielded above average returns for investors, but was difficult to accurately surmise. This was well before the start of the new millennium. With quick advancements in computational power, new analytical paradigms, and revelations in behavior patterns, quantitative analysis and quantitative investing have moved from fringe to mainstream in recent years. As Gareth Henry relays, hedge funds and other various financial institutions are able to make large volume transactions through understanding how asset prices a real world investor movement and vice versa.
Long time private credit expert Gareth Henry makes the argument for mixing quantitative investing with fundamental or qualitative analysis, a mixed process that merges two seemingly different operations. Henry’s research, merging both schools of thought promotes better business, therefore creating a better society. Qualitative analysis seeks to uncover the context of human behavior, not just the value of past qualitative results or outcomes.