Quantitative management

The term quantitative management means the use of mathematical, rational methods when deciding on the composition of a stock portfolio or mutual fund. The attempt is made to exclude qualitative and subjective decisions as much as possible from the investment decision process through the use and integration of objective criteria. In order to achieve this goal, mathematical algorithms are often used within a computer model and program that uses them to determine the best possible portfolio.

advantages and disadvantages

Advocates of the use of these quantitative methods name, among other things, the rapid increase in global data stocks ( flood of data ) and information density as the starting point for these approaches, as automated computer programs can keep track of more parameters than a human individual. These methods also neglect human emotions, which in earlier times were often the basis for speculative bubbles .

Critics, on the other hand, cite these emotions as the decisive factor that has led to the best-performing portfolios in the past. Quantitatively managed funds also often fail to achieve or even outperform traditionally managed products (see also alpha factor ).