Why Quantitative Equity Investing Now?
by Vincent Costa, CFA, and Charu Ahluwalia, Portfolio Specialist Do the markets seem rational or efficient these days? We dont think so, and thats exactly why quantitative investing may be well-positioned to benefit from current conditions. Quantitative techniques are designed to take advantage of the ways investors behave when times are tough. The prospects for quantitative equity managers seem good in 2009 and the years ahead, particularly for long-only strategies. Heres why: The precepts of quantitative investing remain intact n Quantitative investing seeks to exploit investor behaviors that lead to market inefficiencies. We believe tough times will lead to more nonrational behavior, which will increase the opportunities for quantitative disciplines to add value. n The most widely used factors in quantitative models have performed well over the long-term. Chart 1 shows the cumulative returns of quality, valuation and market sentiment factors1. As you can see, from 1989 through 2008
