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Investment Firms Keep Quant Models Know-How under Firm Control using New Business Application from AIM Software

AIM Software unveils GAIN Quant DB, a new application helping asset management firms accelerate the Research process and reduce operational risk 

AIM Software, the leading provider of data management software products to the financial services industry, today announced the availability of GAIN Quant DB, a new application helping asset management firms simplify and accelerate the research process by automating the once tedious task of data preparation. As a result, asset management firms gain in efficiency and model accuracy, and they keep control of the know-how about the models developed by their quants.

Quantitative Analysts – also called “quants” – design and implement complex models to create new investment strategies. The process involves the capture and preparation of large volumes of time series from various sources to research, back-test, validate and to feed the models in the end.

The data preparation is a crucial step to guarantee the highest possible accuracy of the data underlying of new quantitative models before new funds are launched. In numerous cases, each quant develops own tools, scripts, databases, spreadsheets; this data preparation work has historically been manually intensive, time-consuming, error-prone and not fully documented.

In worst cases, the know-how on the data sets and tools vanishes upon an individual’s departure, leading to a high operational risk for the institution.

“Successful quants are valuable and can be headhunted by the competition – together with the know-how, the tools and the data they have been using to develop their models on their desks“, comments Vincent Goubert, Lead Business Development Front Office Solutions at AIM Software. “Institutional investors increasingly demand for more professionalism in quantitative investment, still perceived as a lucrative but secretive area of asset management.”

Reducing the risks upon an individual’s departure

The asset management arm of one of the Top 10 Swiss Banks needed to automate the data preparation activities. After a selection process involving US and European software vendors, the firm has selected GAIN from AIM Software to develop the new business application.

“We needed a powerful solution enabling us to easily aggregate index and market data from multiple sources, including Thomson Reuters QA Direct and stock exchanges to feed MatLab. AIM Software’s GAIN Quant DB was the perfect match” says the Head of Investment Management of the firm.

GAIN Quant DB acts as a central Research database that automatically collects and cross-references data from various sources, thus eliminating the risk of error-prone manual consolidation. Snapshots of market data are created several times a day using a vendor-agnostic approach, thus reducing the risk of “look-ahead-bias” – a known issue in commercial databases happening when historical facts such as returns are revised under the light of new facts not known at the initial time of writing. The snapshots are stored centrally and made available to all the quants for the development and validation of their models.

As a result, the time series available to the quants are more accurate and can be traced back; at the same time the central database requires ten times less storage. The hours saved per day allow research phases to be reduced by one to three months. Even more important: The validated models can be launched within days instead of several weeks.

“Quants are faster in getting the data they need and can focus on what really matters – creating better investment strategies. This reduces our operational risk and our reliance on individual know-how, while highly contributing to our mission of stable and efficient investments for our clients”, comments the firm’s Head of Investment Management.

Not just about the Alpha: Optimizing the front-office tools to get investors’ trust

Martin Buchberger, CEO of AIM Software, comments: “There is a trend towards optimizing the front office data tools. GAIN Quant DB helps asset managers industrialize their processes, be faster in launching new models and keep the know-how in house. It is not only for the alpha; it is also to gain the trust from investors“.

As of now, the application is being implemented at two Europe-based asset management firms and the product roadmap includes the addition of further data sources in the coming months.

“This new application is part of a larger strategy and expands the array of business applications our clients can choose from. GAIN is the only EDM offer on the market that covers the complete data needs of financial firms over the entire lifecycle of investments – from research to production, from pre-trade to post-trade, from front to back”, concludes Buchberger.