At PGIM Quantitative Solutions, our investment philosophy reflects our 45-year track record and our vision of how markets will evolve. We believe any plausible forward-looking view will likely be different than what investors have experienced over the past 10 years, and that markets will provide a more challenging environment. We therefore believe that asset owners will require an adaptive investment manager capable of responding quickly and efficiently to those changing conditions.
Accordingly, we put a premium on both agility and robust diversification: agility to cope with the changes that markets will throw at investors; and diversification to provide a measure of protection during market downturns. This combination is central to all of our investment platforms.
Our philosophy is grounded in the conviction that a systematic approach based on fundamentals can help our clients achieve better outcomes, an approach that harnesses our quantitative process to provide breadth at an asset allocation or stock selection level. We believe in protecting against behavioral bias, and while a reliance on human judgement can work, there are inherent security and portfolio risks that managers might overlook. Our approach also anchors quantitative processes on fundamental views, ensuring strategies don’t get disconnected from the changing circumstances in the markets.
We develop insights and build solutions with the benefit of experience. After all, if the future is going to look different from the recent past, it’s important that clients are served by an asset manager that has navigated through multiple investment environments – not just the relatively benign one we’ve experienced since the Global Financial Crisis.
PGIM Quantitative Solutions seeks to deliver systematic solutions to solve our clients’ individual investment challenges. Our processes harness fundamental insights built on academic and macroeconomic foundations that aim to add value to client portfolios over the long term, continually researching new investment opportunities to provide the most effective solutions. We review the latest market data with the goal of positioning our portfolios to smoothly guide our clients through any economic climate. In our business, everyone and everything is oriented around quantitative methods. We believe this combined systematic and fundamental approach can deliver the greatest impact for our clients because:
Common foundational beliefs
Everyone shares the same foundational beliefs – starting with the data: Data collection and analysis is a significant challenge, and it is important that data is at the core of everything we do, from how we track information, to how we modify code, to how we test.
Our quantitative platform provides a level of flexibility and customization that fundamental or combined platforms struggle with: As a systematic manager, we can easily modify our processes and customize our offerings to adapt to specific client preferences and risk-return profiles. Our multi-factor portfolios provide cost-efficient diversification, along with the collective wisdom that comes from decades of enhancements to our decision-making models.
Systematic investing removes or minimizes human biases: Our strategy is predicated on a team-based approach that negates the risk of placing market calls into the hands of a single decision-maker. Our systematic approach protects against behavioral bias.
We believe that ESG will be a core component of the future for investment management firms, and we are focused on applying ESG principles customized to a quant environment in a thoughtful and forward-looking way.
A Guide to Navigating Turbulent Times
After a decade of relatively benign market conditions, we’ve moved into more difficult macro environment: the post-passive era. In the face of demanding return targets and lower expected returns, active, multi-asset approaches provide much-needed diversification. Disciplined, systematic approaches are particularly fruitful, as they reduce human error and allow for cost-effective execution.
The potential benefits of quantitative multi-asset investing aren’t limited to periods of market turmoil, of course. Systematic investing is predicated on a team-based approach that negates the risk of placing market calls into the hands of a single decision-maker. The breadth of quantitative solutions comes with a corresponding increase in effectiveness. Robust diversification with transparent exposures down to a fine level of detail are also key to customization.
As multi-factor quant investors, PGIM Quantitative Solutions combines pure value with a mix of momentum and quality factors, to diversify sources of
alpha and screen out the low-quality value stocks that may deserve a low rating. While value mispricing relative to growth is close
to all-time highs, there is no fundamental basis to support those prices. As a result, we see a great deal of opportunity in value.
PGIM Quantitative Solutions' thought leadership seeks to guide our clients through current market challenges.
Adaptability and pin-point diversification are essential in the postpassive era. Our selective use of factors in equities and across multiple asset classes may increase our efficiency at converting risk into reward. We believe diversified exposures across dimensions enhances downside protection, while our macro forecasts provide insights into market movements for both current and future diversification needs.
Solutions and Customization
PGIM Quantitative Solutions' modular portfolio construction simplifies our design of client-specific solutions. We can customize down to the stock level for portfolio considerations including targeted volatility, tracking error, tax management and ESG, with product offerings that range from core solutions and systematic macro to multi-asset portfolios and overlays. We believe all of our options can be harnessed to provide stable return streams uncorrelated with existing strategies.
PGIM Quantitative Solutions' data-driven processes are vitally enhanced by teamwork. As a full-quant shop, we work together on common systematic ground to continually enhance our models and product offerings. We then partner with clients across the globe to overcome their toughest challenges, utilizing adaptive and rigorous investment processes that have been central to our objective to convert risk into return for over 40 years.
* There is no guarantee these objectives will be achieved
^ Diversification does not protect against a loss in a particular market; however, it allows you to spread that risk across various asset classes