A Quant Advisor is a regulated entity that aims to democratise access to institutional quantitative strategies with a real track record. They provide a service, which gives precedence to the transparency and usability that the latest technological advances offer, and where the manager/advisor adapts to the investor, not the other way around.
They are Fintech entities within the Wealthtech, vertical industry, which combines three areas:
Investment – Scientific Methodology – Technology
They fall under the same Wealthtech category as Robo Advisors but, in contrast to such, Quant-Advisors focus on the implementation of strategies involving active management and the search for favourable and stable returns that are independent of the financial markets, as opposed to the passive or indexed strategy Robo Advisors use, which depend on the “beta” or behaviour of the market. Both products are therefore complementary within a diversified portfolio.
"The Quant Advisors do not depend on bullish or bearish markets to obtain favourable returns"
Quantitative management is based on a scientific method and aims to predict the future behaviour of the assets and/or markets by means of sophisticated mathematical and statistical techniques combined with comprehensive risk monitoring.
Compared to conventional management, in which investment decisions are conditioned by human emotions such as fear, euphoria, impatience and uncertainty or even by the interests of third parties, Quant Advisors design algorithmic strategies that are 100% systematic and 100% free of human intervention.
Due to the increasing regulation of financial consultancy at a global level, Quant Advisors require authorisation from financial supervisory bodies.
Quant Advisors are characterised by:
Regulation: due to the fact that financial consultancy is a regulated activity per se, the implementation of such requires authorisation from national and international financial supervisory bodies.
Track Record: due to being based on backtesting, its empirical validation can only be verified by means of a real track record and having been previously successfully applied to real money.
Fintech financial technology: technology applied to the on-boarding, monitoring and management of investments, with a focus on Customer Experience and on transparency.
Disintermediation: due to the advanced technology they use, Quant Advisors, similar to Robo Advisors, provide the end client with the possibility of direct investment, without intermediaries and intermediate costs.
Flexibility: thanks also to their advanced technology, they can adapt the investment strategy to the end client, instead of the latter having to adapt to the strategy/manager.
Returns: these types of strategies pursue returns that are stable over time and independent of the market situation, in contrast with the cyclical returns that other modes of management tend to offer.