These models will often turn up investment ideas that go against conventional wisdom but make sense given the supporting data. Real estate investment trusts in Sweden, Finland and Denmark, for instance, would seem counterintuitive, given the negative interest rates in Europe, but the data tells a different story.
Swiss office REIT PSP Swiss Property AG, for instance, since hitting its 52-week low last June, has climbed nearly 20 percent as of mid-April. Decelerating growth in China has also scared off many global investors over the past six months, yet our model is currently recognizing the relative stability and attractive growth profile of toll-road operators in the country.
While investors can certainly recognize the benefits of a systematic approach, in many circles quant strategies have taken on the specter of a closely guarded family secret.
A Reuters story in 2012, for instance, called attention to BlackRock's editorial decision to alter its prospectus for its Large Cap Series funds. The firm formerly attributed its investing strategy to a "multifactor quantitative model" but replaced this characterization to instead credit "third-party research firms."