Is there a difference between Systematic Portfolio Manager vs Quantitative Portfolio Manager?
Would really be useful to understand the similarities and differences if possible. Have heard this term used and overlapped on countless occasions and still don't fully understand what is the real difference or if each is a subset etc.
Sometimes they are used interchangeably, but to set the record:
Quantitative - makes trading decisions based on models and numerical analysis of data. Decisions can be made by a human.
Systematic - no human intervention (maybe in extreme circumstances), you just let the models do their thing.
People throw the terms around loosely and in general there is a lot of overlap, but I have seen real differences (but again it’s open to interpretation).
A systematic fund is rule based. There are a set of rules and you (usually) follow them. These rules tend to be coded and run on a regular basis to put on your trades. The key here is that the rules can be anything you want them to be, they don’t need to be highly quantitative in nature. That being said, it is very hard to have a rule without some numbers to back it (if you want to buy “cheap” stocks what does that mean? You want to short agriculture when the weather is bad, well how do you measure bad? Etc). But while math is involved, the term is more meant to represent the fact that you have a model and set of rules across all your models and your decisions are made through this system than just discretionarily.
Quantitative has the other side of the problem, in that they are almost always systematic but don’t have to be (you can have a very quantitative process to get useful info but then make a discretionary decision based on that, although that isn’t the norm - normally quantitative is a subset of systematic). But quantitative is such an overused word that it means different things to different people. The way I’ve generally seen it used is to make decisions based purely (or mostly) quantitative measures, these can be pretty different than a rules based (systematic) fundamental fund. I’ve seen it for small perceived mispricings, to data mine to find inconsistencies to bet on, etc. It is generally meant to highlight that the math component is the main aspect the fund cares about. So as I said, these are almost always a subset of systematic (then you have quant in risk and other areas that’s another story).
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