Are you building or revamping the quant aspects of your investment process?
You need to focus on building competitive advantage.
The irony is that your desire to build a quick custom solution may lead to your team spending 80% of its time working on 'commodity' IP. That's been our experience working with new teams. If you can avoid this, you may be able to accelerate your 'catch-up' to your competitors.
On this page are some pitfalls, how Calibre features can help, and a whitepaper giving tips for someone starting a new project.
What are the pitfalls you may encounter?
Going from a 'prototype' to actually running money often results in building commodity IP - your competitors already have this. This is compounded by the fact that developing quick in-house systems can lead to unforeseen difficulties later on:
Highly specialised quant investment and research systems take time and expertise to build correctly. We have found most PMs are shocked by the long development time frames and budget blowouts. Building non-competitive advantage 'infrastructure' IP means you miss out on generating returns within your planned time-frames. The opportunity cost from building these quant modules internally can position your fund at a significant disadvantage to your peers.
Internally built systems often become locked into using data from a single provider. It's difficult to change data and research providers as your needs evolve (and data charges change). This means your fund become inflexible to the rapidly changing needs of your quant analysis and your investment processes is not performing as well as it should. Low initial budgets result in systems being built quickly. Quick fix 'first-version' solutions can lead to teams with no flexibility as they transition from concept to actually running money through to full maturity.
A common experience for new teams is to under-estimate the scale of the processing needed to clean and normalise input data. Currencies, relative years, missing data, corporate actions and so on all need to be handled.
Additionally, the ability to see and validate your data in its broader context and then drill down for cross-checking is often overlooked in the early development stages. We've found that these data views are actually critical rather than being non-core. Sanity checking the signal outputs is a crucial capability.
Ongoing maintenance challenges
The specialised resources needed for ongoing maintenance of your newly developed system are often underestimated by a large margin. This leads to increasing costs as well as stability and data quality issues for teams. We have found that over time, one of your key analysts could easily be dedicating 60% of their time to maintaining the data. The cost becomes a loss of a resource to focusing on research and new analysis/backtesting.
Lack of research synergies between teams
Internally built systems are heavily constrained in their ability to facilitate sharing of research, data and insights from the quant investment processes with other teams. Valuable quant insights are not harnessed by these other teams, a loss of investment IP leverage that can come almost cost-free as a benefit from a richer off-the-shelf system that has these features built in.
How could an off-the-shelf system let you run money sooner?
Calibre provides a highly flexible system that your team could be using within a few days. There is nothing else on the market that brings so much functionality to the table while still being customisable enough to suit most team's needs.
We've worked with many teams over nearly 20 years to develop and evolve our IP and our latest SAAS version is more accessible than ever.
#1 Automate your data harvesting
Let Calibre's algorithms seamlessly manage, capture and normalise your custom vendor data and broker research formats. Validate your data signals using our data quality checking algorithms. Contextually drill down and cross-check your data for validity and increase your quant research productivity.
#2 Run your own fully customised data and factor transformations
Calibre gives you unrivalled flexibility to fully customise your data and factor transformations. Avoid getting stuck doing factor creation and data loading, instead spend more time on generating returns.
#3 Use our compatibility to your advantage
Calibre provides COM and REST API's that are compatible with your existing statistical and analytical software. There is no need to spend time and money building custom solutions for your data. Calibre's versatility means your team can focus on building those key factors and algorithms that actually are core to your differentiated offering.
4# Data provider independence
Calibre sits between your data providers and your factor analysis. You have the freedom to change your data providers at any time without worrying about breaking your factor models or processes. Calibre handles all the data inputs, cleaning and normalising and works with all major data providers.
5# Custom time-series factors in real-time
Calibre will parse, update and validate your factors in real-time with time-series updates as soon as data is released by providers and brokers. This capability is expected to become more valuable as more and more data series become continuous rather than the older style 'batch' data feeds.
#6 Run large data sets at speed
Calibre has been designed from scratch to be fast. Each new version has significantly improved processing speeds and user response times. Our latest SAAS offering takes this to another level with cloud-based processing capability as well as a Micro-services and CQRS architecture (similar to those used by Netflix, Facebook and other main-stream services).
#7 Get there faster and spend less
You can avoid the long development time frames and large (unexpected) capital investments. Calibre costs a fraction of the true cost of in-house solutions over a 5 year period. Our high-tech SaaS infrastructure means you can start producing factors in as little as 2 days.
#8 Give your team a cutting edge research system
Calibre is focussed on the future of research. There are a whole suite of capabilities available to give your team the competitive advantage in running money and we continue to evolve to help ensure our clients maintain the competitive position.
At Calibre we have been helping asset managers with their quant research and investment processes for almost 20 years. Our expertise is used and trusted by top-tier fund managers because we are a proven solution that they have worked with over time.
What to continue the conversation?
To learn more about how Calibre can give you a competitive advantage, download our whitepaper on best practices or contact us to discuss how we can help your team.