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February 2019

GS CORE® Equities Portfolios Q&A with Gary Chropuvka

1. How important are evolving trends in Quantitative Investing?

 

Active investment management has always been about generating an informational advantage and anticipating evolving trends more quickly than other market participants. Some of these trends are so significant that they impact multiple parts of our everyday lives and even start to re-shape industries globally.

Within the Quantitative Investment Strategies team at Goldman Sachs Asset Management, we believe that one such trend is the exponential growth in data and the opportunities that come with it. From smartphones to social media and the internet of things, we are now creating and consuming data at an exponential speed. As a result, investors have access to more information on public companies than ever before — information that can potentially influence stock prices.

This, together with rapid advancements in the technology that helps to make sense of the data, enables us to push the boundaries of conventional asset management and tap into previously unknown return sources.

 

2. What next big trend will impact the GS CORE® Equity Portfolios?

 

We believe that we are only at the beginning of the Data Revolution that is transforming every industry globally.  While our core investment philosophy has remained the same since our first investments in the late 1980s, the types of data we analyse have grown considerably over time and continue to expand. In the past, we could only use computers to analyse structured data, or data that is easily quantifiable and organized in a set format like numbers in a spreadsheet.

Today, new technologies allow us to analyse unstructured data, such as language and images, for the first time. As more and more new data sources become available, we continue to research novel investment ideas to enhance our process and ultimately deliver consistent performance for our clients in the future.

 

3. Will computers replace human portfolio managers in the future?

 

While some believe that advanced technology will replace humans across industries, we view technology and data as tools to enhance the decision making process of our portfolio managers, whose human judgement we continue to place great importance on. Our team is made up of more than 175 professionals, approximately half of whom are technologists and engineers, who are continuously researching and testing new economically intuitive data sets and ideas that drive our investment strategies. Our researchers rely on their experience and market knowledge to assess the future success of any investment factor and exercise their judgement when selecting the data and analytics that we use in investing.

Once a new idea is implemented in our process, we use it to analyse the return potential of the stocks in our investment universe. This is a highly systematic process, enabling us to process millions of data points and evaluate more than 13,000 stocks globally every day. However, before we act on any of the information generated by our quantitative models, our portfolio managers review every trade and position and may intervene during certain periods of extreme stress in an effort to reduce or contain risk.

Related Content

The Big Deal About Big Data

Big Data is transforming companies, sectors and the broader economy. Active management has always been about generating an informational advantage. Big Data, with the right human judgement, can help us do this.

ABOUT THE AUTHOR

Gary Chropuvka

Gary Chropuvka

Co-Head, Quantitative Investment Strategies, GSAM