Quant with $135 billion in assets adjusts ESG model

The biggest data breakers in the financial industry are adapting their models to one of the fastest growing corners of money management, while finding some strange price developments.

Man Group Plc, a quantum-focused investment company that controls a total of $ 135 billion in assets, says it has adapted traditional models to identify environmental, social and management investment risks. This is due to the fact that the history of ECG is short and bumpy, which makes it difficult to have a good chance of future events without some adjustments.

“What’s really challenging for quantums is that the future will not look like the past,” said Robert Furdak, who oversees $ 46 billion as the Group’s chief investment officer in the ECG-integrated Man Group. “Companies are focusing on these things much more than five or ten years ago. Thus, the attempt to conduct a 20-year post-test will not work. We need to have a perspective approach to post-testing. ”

This means that pure quantum models will not work with ECG, և people need to be more involved in the process, according to Furdak. The goal is to scrutinize raw data through a critical lens to make sure investors are not fooled into thinking they are looking at a strong ECG fund, when in fact something else is affecting performance.

The fact that Man Group, based in London, now devotes about one-third of its operations to ECG, shows how quickly the industry has mastered finance. According to Bloomberg Intelligence, by 2025 the global ECG market will exceed $ 50 trillion.

“HARD” EVALUATIONS

Furdak says the adjusted quantum models used by the Man Group show some bad prices. On the one hand, there are “more traditional ECG games, such as wind, air, infrastructure, where there is some proven technology,” they “may seem a little expensive, but it is justified by the higher margins,” he said. he said. But then there are other parts of the market where things seem less reasonable.

“Where we see insane prices are some of ESG’s favorites, where there really is no proven technology,” he said. “It’s kind of speculative. Some of the manufacturers of EV (electric car) structural displays have gone crazy for awards. It is here that our integrated approach looks at the ECG, but it’s trying to look at the assessment վել to integrate into future investments. ”

In general, quantums may have an advantage over other asset managers in navigating ECG investments, given their ability to sort huge data sets.

“It’s not easy, but managers find in the ECG data alpha signals that they can use in the future,” says Bryant, who assists hedge funds, alternative managers in the United States, Asia and London. European customers.

But quantums are just as good as their models. During the epidemic, the industry produced mixed results, with some failing to dramatically predict the shock of the global health crisis. Through the ESG, they should find out how to deal with terrible weather events, corporate scandals, and regulation changes. But there is also a behavioral component that needs to be considered.

Furdak says the list of challenges is long. “One is how the future will develop by changing corporate behavior by focusing on beneficiaries and shareholders. How will it be manifested? ” The other is “the slow-moving nature of ECG data,” he said. “How do you use it, especially with faster strategies, such as climate change?”

“You measure things over decades և centuries, և if you run a strategy that has a three-week run, how do you balance it?” Furdak says Man AHL, the firm’s quantitative investment program, is now “trying to do that research.”

“Climate change is a long-term phenomenon,” he said. “But there are short-term episodic things that can be used.”

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