Goldman Sachs unit launches ‘quant’ equity funds aimed at Hong Kong’s retail investors

  • The US asset manager joins rivals in applying machine learning to pick stocks
PUBLISHED : Tuesday, 30 October, 2018, 7:26pm
UPDATED : Wednesday, 31 October, 2018, 4:14pm

Goldman Sachs Asset Management said on Tuesday that it plans to introduce three quantitative equity strategies in Hong Kong that use algorithms to help managers pick stocks, joining competitors who already apply machine learning and big data analysis in stock investing.

Also called systematic investing, these strategies often rely on mathematical computations, number crunching and big data analytics to identify trading opportunities.

BlackRock and alternative investment manager PAG are among those investing heavily in developing their “quant” strategies.

GSAM, the asset management arm of the US investment bank, this month received approval from the Securities and Futures Commission to launch these quant equity funds for Hong Kong’s retail segment. These were until recently only offered to private banking and institutional investors.

The three quant equity funds are part of the seven funds it is launching in the city, which also includes other bond and debt funds.

Banks should throw in the towel on proprietary trading, after all the robots have already won

Alison Lau, head of the quantitative investment strategies team for Asia-Pacific ex-Japan at GSAM, said the enormous amount of digital data that can be read by machines is giving portfolio managers an “information advantage”, as they develop algorithms to help them pick stocks that, hopefully, could outperform.

“We are at a point where technology is transforming all industries, so the question is why shouldn’t technology also be disrupting how we pick stocks,” said Lau.

She added that quantitative equity investing still remains a business area that requires relatively high investment because of the high costs involved in obtaining the scores of data sets and the need to build out the technology and infrastructure to be able to process those gigantic pools of data.

Jessica Jones, head of GSAM’s retail client business in Asia-Pacific ex-Japan, said the firm will over time gauge more views from Hong Kong clients in identifying what other strategies to bring to this market.

In Singapore, where GSAM has been offering retail funds since 2016, it works with banks such as DBS, Standard Chartered and HSBC to distribute these products to retail clients.

BlackRock targets China’s vast pool of savings with ETFs, ‘quant’ strategies

Quantitative equity strategy is also been a big focus for BlackRock, which sees China as an attractive market for its systematic active equities strategy.

BlackRock, which is registered as a private fund manager in China, plans to launch such strategies to qualified retail investors in China.

GSAM’s quantitative investment team had US$165 billion asset under management globally as of 2017. In China, it works with other fund managers in offering their products onshore as a sub-adviser.