Get logical

Sean Segar, head of Product Development at STANLIB, demystifies quantitative investing, as he believes that this product type has a wider role to play in the average investor's portfolio.

Segar explains that the easiest way to understand what quantitative investing is all about is by thinking of John Keynes' Beauty Pageant Analogy.

When asked which contestant was expected to win the pageant, Keynes says that people tend to choose the girl that they like, rather that the girl that the judges like.

Analogously, Keynes explains that the fund managers tend to choose stocks that they like, rather than stocks that the market likes.

Quantitative investing on the other hand seeks to strip out the emotion associated with investing and choose stocks that the market will like.

Investment calls are not decided by individuals, emotion, prejudice, style or ego. The math decides. This ensures that rigorous investment decisions are made in pursuit of the fund's aim: "to achieve stable, medium-to long-term growth with lower volatility than that of general funds".

"In fact, a quants fund gives investors something they've always wanted - a logical, objective approach to investment. You will never again have the nagging suspicion that somebody's gut-feel made your investment look sick.

"Quants subtract the subjectivity. This often adds up to superior performance - as recent results show."

Health warning: If you need more information on this investment tool, speak to a specialist.