Grant Watson, a boutique lead at Old Mutual Investment Group says that the emergence of a low return world continues to challenge investors in their search for yield.<\/p>\n
Within a local context, he said that growth assets in particular are struggling.<\/p>\n
This environment is shaping the rise of a number of industry disruptors within the asset managers, which is forcing the industry to rethink its investment approach and product offerings.<\/p>\n
Watson opined that this disruption presents an opportunity for more forward thinking investors to adapt their investment approach to enable them to capitalise on the changing landscape.<\/p>\n
One such disruptor, he said, is the progressive use of data analysis as a factor-based investment tool.<\/p>\n
\u201cGiven the deluge of data that today\u2019s investors are faced with, there is an increasing need for filtering tools. This is essentially what machine-readable news \u2013 a quantitative tool developed and used in one of our Funds \u2013 was designed for,\u201d he explained.<\/p>\n
\u201cThe world is moving into a hugely tech-driven age, but in an era of information overload, the combination of technology with human judgement will prove to be the most powerful investment tool of the future.\u201d<\/p>\n
He added that that while the world is moving at a rapid technological pace, the investment industry has, to some extent, lagged behind. The rise of fake news, for example, has started to influence the markets.<\/p>\n
“In the realm of investing, however, whether information is based on fact or fiction is less of a concern, as the real value exists in an investor\u2019s ability to objectively read the market sentiment that an incessant ream of information is inciting,” he said.<\/p>\n
The model enables the analysis of large amounts of data, offering insight into market sentiment to anticipate the behaviour of the \u2018herd\u2019.<\/p>\n
“By blending human analysis with mechanical objectivity, the model enables us to assess how any behavioural biases can be exploited,” said Watson.<\/p>\n