Question

Portfolio Valuation and Equity Analysis

What is the extent and purpose of human intervention in a quantitative investment management process?

Answer 1

Quantitative investment methods are investment models that use scientific techniques to frame a portfolio and the right investment strategy. There is no human bias or judgment involved in the management process and the investment is made as per mathematical models. The model must be tested before it can be put to use and usually works well for companies with a larger market cap. Once tested, human intervention is limited to assessing the non financial metrics such as frauds in a company, collapse of the financial industry, laws and regulations etc.