Whether it is down to a lack of imagination or of distribution power on the side of fund houses, actively managed products are being sidelined in many parts of Europe in favour of synthetically produced investment banking products. Elisa Trovato speaks to some of the more innovative and successful providers

The wealthy investor, rendered wary by several stormy years, is preparing to step back into the world of equities. Felix Lanters offers a guide to picking the right investment strategy and the appropriate manager.

Asset allocation is about controlling the risk added to the portfolio by each of its components.

It might seem as though fund managers are just playing a numbers game, but quantitative methods help them to spot the lucrative trends. Quantitative techniques were once reserved for a handful of players in the marketplace. But things have changed. These days, most fund managers would claim to use some form of quantitative analysis as part of their investment process. Their growing acceptance and use is no accident. Using these techniques brings many advantages, in particular when dealing with large amounts of data or when looking to exercise discipline.

There’s no mystery involved: computers have not taken over the investment process, and it still takes a creative and efficient human portfolio manager to make the most of quantitative data. Many imagine quantitative investment managers as rather mysterious boffins working under the direction of an all-powerful computer model. This “black-box” stereotype has little in common with reality and offers no insight into the factors that differentiate the best “quant” managers from the mediocre.

Style investment strategies, which revolve around the monitoring of distinct market segments, depend on quantitative analysis of the underlying stocks. The continuing recovery of European stock markets is increasing investors’ appetite for equities, but a residual uncertainty is preventing a herd-like rush back into stocks. Style investment strategies, where managers swap from “value” to “growth” companies depending on market conditions, are gaining in popularity in line with this renewed interest towards stock markets.