Quantamental Investing Methodology & Process for Multi-asset Portfolios

We use tactical-management & dynamic-allocation to build multi-asset portfolios across the globe.

Quantamental Investing

Investment Methodology

We view assets such as equity, gold, commodities, alternates, or cash as complementary components of a portfolio. Each of these components provides the desired returns to an investor’s portfolio at different times.

A Quantamental Investing approach uses fundamental, quantitative, and technical analyses, allowing us to construct portfolios across the spectrum of asset classes. While some asset classes can be deconstructed into several components (like equity) to estimate their valuation, other assets rely on demand & supply quantitative data (like gold or commodities). However, all markets rely on technical inputs for timing entries and exits or sizing exposure.

More importantly, a quantamental approach due to its nature of mixing geopolitical narratives and macroeconomic numbers, blends the experience and insights of humans with the raw processing power of machines.

Quantamental Multi-Asset

Not all assets pay worthwhile returns at all times. Assets may move up (favourable outcome) or may move downwards or sideways (unfavourable outcome). This requires buying or selling assets to avoid periods of poor returns along with switching between assets to get better returns. To achieve this we use the tools of tactical-management and dynamic-allocation.

Tactical-management involves buying or selling of assets (or reducing exposure to them) to take up their risks during specific periods. Timing markets requires defining events that indicate the beginning and end of good performance periods for an asset class. Such events can be defined using quantitative tools such as time-series and technical tools such as price patterns. However, there is a need for context in which the event is happening. This is done using fundamental reasoning. Complex rules around context, time-series, and patterns are best programmed and tracked by algorithms.


Some asset classes move complementary to each other at some times, but not always. This requires taking into account the market-cycle of each asset class seperately when creating a multi-asset portfolio. Dynamic-allocation of assets allows switching exposure between asset classes on the basis of tactical-management of individual near complementary assets rather than fixed proportions (strategic allocation). This not only reduces overall risk of the portfolio but also enhances the returns. Once again context is required when defining rules for switching.

The QVGS Framework

Investment Process

A Quantamental Investing methodology comes down to designing effective strategies that are systematic in operation. To build and operate multi-asset we use the principles of the QVGS Framework. Three principles are of key importance for running tactically-manged and dynamically-allocated multi-asset strategies:

  1. Market-cycles
  2. Alternate-asset
  3. Barbell Strategy

By incorporating these three principles a process can be for creating and operating a strategy which involves periodic review of the suitability of an asset in the portfolio. Alongside the process ascribes confidence levels to position size the exposure of an asset to the portfolio.

The 3 Key Principles

Market Cycle

Markets move in a cyclical fashion of of boom, doom and gloom. This cycles is made up of many smaller underlying cycles which when overlapped for composite cycles of value, growth, and sentiment. By understanding these cycles, they can be exploited to assume risk or stay away from it completely. Equity cycles are different for differetn market caps, but have a high coorelation to large caps. Gold typically moes counter-cyclical to equity but not always.

Alternate Asset

Each asset class (primary) has a complemantry asset class (alternate) which moves in the opposite ditection. For a long-only strategy identifying the alternate asset becomes paramount in order to gain from periods when the primary asset class is not performing. However, there are constraints of varying correlations, tax optimization and liquidity that need to be factored in when making pairs.

Barbell Strategy

A barbell strategy assumes only extreme ends of risk in the right proportions in order get a weighted average (middling) risk. This is more favourable than taking up the middling risk in a single instrument because it skews the probability of getting good outcomes, while being able to preserve capital at the same time. A barbell can be strategic or tactical. Tactical barbells lower volatility even more and geenrate even better returns.

Quantamental Construction & Management

Managing portfolios is a continuous endeavour. This requires us to follow a strategy-based approach to generate returns from different assets and be system-driven to manage risk. The investment process for an asset class is run on a periodic basis (weekly/ monthly/ quarterly) in order to tactically manage and dynamically allocate capital to multiple asset classes.

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