“The big issue that we have in the industry is again a metaphysical problem of what is value, what is quality, what is growth,” he said. “There is no one uniform definition and therein lies the problem.”
For investors less concerned with a metaphysical quant debate and more with returns, the problem is various constructions of the same strategy can often show lucrative results in backtests. Believing in Buffett is not enough.
“The fact that quant managers show a lot of data doesn’t mean they have greater ability to guarantee a particular investment outcome,” said Jason Hsu, chief investment officer at Rayliant Global Advisors and co-founder of Research Affiliates, pioneer of smart beta. “More accurately, you should think of it as scientific marketing: using a lot of data to help sell products.”
This article was provided by Bloomberg News.