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Fundamental Investment Strategy

There are many challenges to an Optimised Fundamental Investment Research Process.

As a fundamental investment manager, whether you take a bottom-up or a top-down approach, you know the practical challenges of implementing a robust fundamental investment research process.

Given that calculating the intrinsic value and risk profile for every company relies on the methods and skills of individual analysts and the data sources they use, how do you make sure that:

Current and historical research is centrally available and isn’t held in Excel spreadsheets on drives across the company network
Extra time is not being spent by analysts manually combining market data and forecasts to generate financial reports for discussion
Integrating data and checking calculations isn’t wasting hours of analysts’ time
Data sources can be switched without compromising the integrity of your current or historical data
Analysts can access the data sources they need without delays
Your company’s investment strategy (and its business IP) doesn’t reside with independent team members or rely on specific data providers
Fundamental Investment Research Process

Is a bespoke software solution the answer?

Very seldom, and not without big investment and its own risks.

Many companies have tried solving these challenges with an inhouse development team. But given the complexity of the processes, the ideal development team needs an exceptionally good understanding of asset management to create a system that solves problems for analysts.

If you can recruit such a team, the solution becomes dependent on the individual developers who build the system, creating problems when they leave. Furthermore, business logic often sits in code, making it hard for analysts to see what calculations and logic are applied to their models.

What would an ideal fundamental investment process achieve?

In an ideal situation, fundamental investment managers wouldn’t have to worry about these operational challenges. You would be using a system that:

Makes the financial models and business logic that underpin instruments easy to see and alter over time
Enables everyone in the team to access all current and historical research quickly and easily
Allows analysts to access and upload data from their preferred software
Automates the integration and homogenisation of research so that it can be compared
Integrates different data sources to do calculations, trigger responses or initiate business logic
Makes it simple to change data sources, and combine market data with your analysts’ forecasts to generate models for discussion, and to change data sources

Such a solution would optimise the process while at the same time capturing your company’s investment IP within a system independent of team members’ individual genius and data providers.

What features would this management system have?
To achieve these goals, a management system must combine flexibility and automation with a structured data warehouse that ensures stability, integrity and consistency in your strategy.  

Enter Quintessence…  An elegant solution to the challenges most fundamental investment managers face, Quintessence is a platform built specifically to create custom-developed models. It combines the robustness of a data warehouse with the flexibility that you get from using Excel. The Quintessence platform:
Stores models and business logic so that they are clear and accessible

Without being able to do this, you run the risk of having the same calculation or analysis being done in different ways with diverging results over time.  Besides making it easy to see what logic has been applied, the system shows how models changed over time and makes it easy to reuse an analyst’s work in future analyses.

Provides quick and easy access to analysts’ current and historical research

Besides quickly generating new reports to discuss in your investment meetings (for example generating a snail trail of a company’s ranking over time), Quintessence allows you to perform retrospectives on investment decisions and assess an analyst’s efficiency and performance.

Works with Microsoft Excel, PowerBI, Python, R and many other software packages

Analysts want to manipulate data with software that works for them. Quintessence allows them to access and dig into the data in Microsoft Excel or any other data analysis software, and then upload their work back to the Quintessence platform directly from their tool of choice.

Decouples analyst research from market data providers

Using a system that is data agnostic can minimise data costs while giving analysts the option to use data from different sources.

Accommodates data, logic and IP changes over time

As the strategy of your investment company changes, the models used to analyse instruments and the data being analysed will change. With Quintessence, you can track and compare these changes. The platform also accommodates data changing daily, weekly, monthly or annually, and enables analysts to easily run analyses on historic data.

Ensures that data is sufficiently high quality to underpin good decision-making  

With Quintessence, all data is mapped to the data model so that any calculations, metrics or logic are automatically applied consistently across the organisation.

Your middle office team can now focus on the critical operational issues that crop up day to day while being assured that all their reports are going out automatically.

Give your fundamental investment strategy a solid foundation with Quintessence. Get answers to your questions by speaking to one of our consultants