This article deals with the question of what quantitative investing actually means.
What is quantitative investing
Quantitative investing means investing according to a fixed set of rules. Frequently, algorithms programmed specifically for some investment rules make corresponding trading decisions.
Examples of quantative investing
The quantitative investing has become a field of interest as the success story of Jim Simons spread all around the world. Simons is the founder of Renaissance Technologies, which manages the Medallion Fund. It generated an annual return of approximately 39.1% between 1988 and 2018, surpassing other successful funds such as the Quantum Fund.
Intelligent, adaptive artificial intelligence algorithms can analyze historical market data to discover market anomalies. These market anomalies can then be used within a rule-based investment system to generate excess returns over the general market. This is an example of Quantitative Investing and the formula for success of Jim Simons‘ Medallion Fund.