Trends Watch: Opportunities for Systematic Strategies

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Andrew Dassori, Founder & CIO, Wavelength Capital Management.

What is your outlook for alternatives?

Alternatives represent a broad category with many funds that face challenges, but the transformation underway in bond markets creates clear opportunities for systematic strategies. The rise of electronic trading and new regulatory requirements provide greater depth and breadth for datasets in markets that were previously opaque. The data is complex – companies with a single stock ticker can have more than 100 different bond issues – but it’s also been less picked over, providing an ideal set of conditions to generate alpha through quantitative analysis. Investors with the ability to process new types of data systematically are positioned to capitalize on the expanding opportunity set in fixed-income markets.

What is your outlook for the economy?

While bold forecasts make headlines, we haven’t seen evidence of the ability to consistently predict recessions, so we fundamentally avoid making far-reaching economic bets. With that being said, the U.S. economy has been expanding for over a decade, and we see late cycle dynamics leading to a wider set of potential outcomes for growth and inflation. We expect uncertainty around this to produce a climate of heightened volatility as central banks enter unfamiliar economic territory with no blueprint for policy decisions.

What keeps you up at night?

I’m fortunate that our investment process is designed to limit short-term noise by balancing exposure equally across potential economic environments. As a result, we’re organically insulated from the day-to-day impact of tweets and other unpredictable events. We build our portfolio to withstand these unstable sources of stress over the course of a market cycle, so it’s primarily up to my newborn daughter to keep me up at night.