However, it’s been so extreme and so volatile that it hasn’t really been picked up yet at all. In very recent times, we’ve seen that come down a little bit. Looking forward to the other side of this event – and who knows when that is and what it looks like when we get there – but as that cross-sectional volatility stabilises, I think you’ve got a very conducive environment for active management and particularly quants to generate solid outperformance. I think last year has been, as Kristian touched on, a sector picker’s market.

With the banks, the resources, and others there were some really nice themes that rolled through there. To the extent that fundamental managers picked those up, that’s where a lot of outperformance came from. In terms of the cross-sectional volatility, that’s at the stock level and that’s where it has been random so I think it’s been probably a bit easier at the sector level and incredibly difficult at the stock level. In terms of manager selection, research is certainly one of the key themes for us.

That’s looking at what the managers have done through time and what they’re looking at at the moment, not just in terms of ideas, but how they’ve actually been implemented and the final outcomes. There are quite extraordinary differences. We’re seeing some managers, say with a value signal, that have generated very strong outperformance from that, while others have been hit very hard. So even though everyone’s got value, how they actually construct it, how they implement it is very, very different and we’re starting to see that come through.

Everyone hopes to find that proprietary data source or that new signal which lasts for as long a timeframe as possible. Some have been more successful in that space. Dennis Sams: Some of the concern about industry data models though is that you may fall into the trap of just fitting history and it becomes too specific. And the second thing is that some of the big proprietary databases, which may look new and original and no-one else has touched them before, but when you think about what signal you actually can extract from that, do you actually get a different signal to the one that you’ve already got from some other indicator?

Peter Laity: Talking about unique ideas, I was speaking to a fund manager in London who said: “Oh we reckon we’ve got about a quarter of our ideas that are unique and we’d like to get that to 50 per cent.” And I just looked at him and I went, “Pffft!” That’s a pretty big challenge given that there are just the three major factors. I was wondering Greg (Vaughan) what sort of uniqueness you think you have in your process compared to others?

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