At the same time, this growth has led to concerns around crowding in equity quant strategies in particular and the potential for another 2007-style ‘quant crash’. That said, the team’s measures of risk suggest that these concerns may be overblown.
Big Data and Machine Learning
Recent advancements in ‘big data’ and ‘machine learning’ have also driven change in how systematic managers incorporate data, technology and analytics in their investment process. The Strategic Consulting team found that 54% of the systematic managers in their sample are now employing alternative and ‘big data’ sources such as web scraping (i.e., a technique to extract large amounts of data from websites, social media data, satellite data and credit card data). Additionally, 62% of the systematic managers are using machine learning techniques within the investment process.