The market is tough to beat over the long-term, so outcomes depend on time in the market, not timing the market. Staying invested can maximize “personal rate of return,” so active managers add value by promoting time in the market.
Our Philosophy
Better investment outcomes can occur at the intersection of thoughtful portfolio design and objective decision-making.
Roger Scheffel, CIO of WST Capital Management, breaks down the firm’s investment philosophy and critical issues our solutions are designed to address.
Investor behavior often creates increased risk in investing - we attempt to control risk in order to promote better behavior.
It’s easy to forget that volatility drives performance on the upside as much as the downside, because volatility is unnerving. It can quickly kill investor confidence, leading to patterns in short-term investor behavior that can compromise long-term investment outcomes. Buying and selling based on emotion amounts to an ineffective tactical framework – we’re trying to offer something better.
Philosophy
Objective
We seek to reshape investors’ experience of risk by dynamically adjusting investment posture as markets change, seeking growth in constructive environments and protecting capital in challenging ones.
Design
Portfolio design combines market theory, portfolio management perspective and quantitative science, empowering strategies to “think” flexibly in a rules-based framework driven by machine learning.
We believe in and embrace the science of investing, and we offer unique synergy between human experience and machine learning.
Our Approach
Our approaches invest through a quantitative lens built to empathize with investor experience while objectively analyzing market trends.
We draw on various investment traditions to deliver next-generation solutions.
Our strategies attempt to reconcile a variety of investment traditions while borrowing their strengths. We aim to: preserve the risk management benefits but limit the emotional guesswork of active management; deliver the efficiency of passive investing but offer greater precision through strategic beta; embrace the systematic roots but pursue a more flexible approach to factor-based investing.
Active Quant: An Interdisciplinary Approach
Active
Subjective/behavioral decision-making
Dynamic Exposure Risk Management
Passive
Static allocation and structural biases
Efficient Access Diverse Exposure
Factor-Based
Limited by small range of investable factors
Systematic Objective
Portfolio design is the medium for expressing our experience and perspective on the forces that drive markets, but we exit the equation where historical data says we get in our own way – daily decision-making. Instead, we let our quant engine guide us through markets and make calls based on nuanced data rather than emotion.