Generally, “quant” funds and asset managers are remembered for their failures and poor examples taken out of context to justify a preference for discretionary-managed funds, likely due to a lack of understanding of the modus operandi and limited comprehension of the models and strategies used. However, when compared to the failures and poor examples of traditionally discretionary managers during the same period, they are significantly fewer—both in terms of fund management and asset selection.
People often forget that the commonly employed decision-making process and operations of a discretionary manager have many deficiencies, which are typically overlooked during favorable times and only remembered too late—often because past failures were disregarded due to the “short memory of the market.”
Moreover, rhetorical criticism is often based on buzzwords and clichés that do not reflect the operations of a professionally, seriously, and conscientiously managed “quant” fund. Terms like “black box” and “robots” are frequently used and clearly reveal a lack of understanding of a “quant” fund’s business model—partly as a result of limited transparency from “quant” managers regarding their modus operandi. In our view, this criticism is somewhat exaggerated, as we believe it is entirely possible to explain the
models and methods used in a systematic fund through appropriate technical documentation.
Despite these barriers, two “quant” managers, with over ten years of history, have already established themselves in the financial market, and in recent years, at least a dozen new managers have started operations. This number is still low when compared to the number of discretionary managers and the potential of the Brazilian financial market.
Although CARTESIUS CAPITAL is not a “quant” manager, our mission is to help shift the perception that financial market professionals, investors, and the general public interested in the topic have regarding non-discretionarily managed funds. To that end, we will contribute to the dissemination and popularization of other management approaches from a more modern perspective, as well as the methods and technologies we employ in the funds managed by CARTESIUS CAPITAL. In this way, we will support the emergence of new managers and the demystification of these classes of funds.