Diversity is our recipe for success – in investments and in our teams
Diversity is key to success – both in our investment strategies and with regards to our employees. In Investments, different factors complement each other and thus lead to better results. At the same time, we put great importance on cognitive diversity in our talent strategy, because a team with different ways of thinking develops more innovative and successful solutions.
Key takeaways
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At Quoniam, different approaches within the team complement each other just as factors in our multi-factor model complement each other to produce robust and balanced solutions.
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Our interdisciplinary research team benefits from diverse approaches that avoid one-sided perspectives and promote innovation.
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Intellectual diversity strengthens the stability, quality, and future viability of our decisions, both in our portfolio and within the team.
What does multifactor investing mean and how do we implement it at Quoniam?
(Multi-)factor strategies differ in the definition of the factors used. It is known from capital market research that returns are explained by factors. Which factors these exactly are and how they are defined is a matter of debate both academically and among practitioners. The definition of these factors and a holistic factor model are therefore essential. Many factor approaches use simple, often one-dimensional factor definitions.
In order to gain an edge over simpler definitions, we continuously develop our factors. The additional information used provides a far more comprehensive explanation. To have confidence in the future performance of the factors, it is essential to analyse the individual factors both theoretically and empirically. To do this, we conduct our own research.
The aim of Quoniam’s multi-factor model is to identify companies with favourable valuations, high quality and positive sentiment or trends and to assess their relative attractiveness. Based on the three basic categories value, quality and momentum, our multi-factor model currently comprises more than 60 metrics, each of which is summarised in factors. These metrics allow us to cover all aspects of value, quality and momentum. The idea behind our multi-factor concept is a balanced portfolio that can create added value in every market phase.
What does cognitive diversity mean and how does it manifest itself at Quoniam?
In contrast to demographic diversity, which focuses on the diversity of characteristics such as gender, age or ethnicity, cognitive diversity refers to the diversity of people’s intellectual activities, ways of thinking and approaches.
At Quoniam, we recruit investment professionals who have completed different degree programmes or pursued different specialisations in their careers. Our investment team consists of numerous academics with doctorates in a variety of disciplines such as mathematics, computational linguistics, engineering and physics, as well as “traditional” disciplines such as finance, economics and management.
We are convinced of the potential of cognitive diversity: it has been proven that diverse teams perform better and are more innovative. As a small systematic asset manager with close ties to science, progress and innovation are essential for us to set ourselves apart from the competition. That is why it is important for us to employ a balanced mix of employees who bring along different approaches and ways of thinking, especially in our research team.
We have deliberately diversified our research team so that topics are considered from a wide variety of perspectives. This allows us to avoid the pitfalls of groupthink and have more robust models.
Diverse mindsets within the team are the key to robust solutions, similar to a well-balanced portfolio in which positive characteristics complement each other, creating strength and consistency.
Lisa Burkhardt, D&I Champion
What do multifactor investing and cognitive diversity have in common and why do we at Quoniam believe in both?
Just as we are convinced in our investment approach that a variety of factors and a variety of securities form a better and more robust portfolio, we also believe that teams consisting of a variety of diverse employees can act better, more innovatively and more robustly. The greater the cognitive diversity, the more diverse the perspectives from which topics can be viewed and the lower the risk of falling into so-called thinking silos and overlooking aspects.
In our portfolios, we assume that different factors in different market phases complement each other, i.e. compensate for each other. The same applies to our employees: Our experience shows that cognitive diversity leads to more multi-faceted and consistent solutions. Both a multi-factor approach and cognitive diversity are indispensable components of our work as quantitative asset managers.
