Systematic Investing

In some regards, systematic trading and investing are the exact opposite of active investment management. Management means that someone actively decides which assets to invest your money in. For example, you may decide to put your money into a hedge fund, and in turn, the fund manager decides which assets to purchase with it. These decisions are made at least in part based on intuition.

CARL's quants use quantitative investment principles, which can be considered a subset of systematic trading in general.

In contrast, systematic investing means you follow a set of rules based on data. For example, you may set yourself the rule that you'll only invest your money into the top-ranked hedge funds based on annual performance data. These funds, in turn, may use your money to invest in assets based on historical performance data and statistical market trends.

This is also why quants are a natural fit for the systematic investing approach, as they are fundamentally based on a fixed ruleset, using advanced computer algorithms to make investment decisions.

A fight-or-flight response is a real thing, and it still rears its head today, even in a civilized context such as the financial market. Investors often react very cautiously when bad news is on the horizon. They withdraw their money for fear they might lose it when in a long-term context, it might be more prudent to keep investing – though perhaps in different asset classes.

This is where the systematic investing approach shines. Following a set of rules based on data prevents you from making mistakes in the heat of the moment. This is also why quantitative hedge funds, such as the ones which CARL can give you access to, have frequently outperformed active management funds in recent history. CARL knows that your worst enemies when investing your money are your own instincts – and reliable data is a reliable way towards greater returns.

Quants Are a Way of Investing Systematically

Any investor can choose to invest systematically. Based on the available data, you could just make up a set of rules for your own investment and start buying and selling stocks, options, commodities, and so on, all based on your ruleset. Naturally, if you don't have the time and resources necessary to build and refine a highly sophisticated ruleset, this will likely not work out to your advantage. As easy as it may sound to just invest systematically, the crucial point here is that your ruleset should be based on as much data as possible, and it should have already proven its merit.

CARL's quants offer you all the benefits of the systematic approach. No need for you to gather data and develop your own ruleset – all you need is the CARL app!

This is where CARL's quants come in as the perfect way for you to use the systematic approach to grow your wealth without requiring you to create your own ruleset. Our quantitative strategies use highly advanced quantitative models and machine learning algorithms to arrive at their investment decisions. Moreover, these algorithms have been relentlessly backtested before being applied to the actual market.

Thus, CARL's portfolio of quant strategies allows you to put your money into funds that are themselves based on systematic trading principles. You benefit from the power of quants without needing to come up with your own ruleset.

If you've been employed at some point in your life and your employer has offered a 401(k), you may already be familiar with the core concept of systematic trading from systematic investment plans. An SIP requires you to make regular payments to a mutual fund, your 401(k) or a similar type of fund in order to plan for retirement, for example.

While this concept doesn't seem like it has much in common with systematic investment, it's a good representation of the concept of "systematic" financial planning: With a systematic investment plan, you make regular payments of equal sums of money to a fund or account in order to benefit from the accumulated wealth later. That's your "ruleset", in a similar way that as an investor you may come up with your own rules for investing and follow it strictly to maximize your long-term gains.

Systematic trading has become ever more popular over the last two decades. The reason for this is simple: It works! By engaging in trading systematically, you can eliminate human errors or panic reactions from the equation. To achieve this without spending time and money on establishing your own system, CARL can give you access to sophisticated quant strategies that can boast 15%+ targeted returns thanks to their advanced computer algorithms and proven investing strategies.