Philosophy & process

The CFM investment philosophy derives from a combination of scientific discovery, information technology, algorithmically managed risk and innovation.

Investment process

Financial markets are constantly evolving. The markets have a degree of predictability, made increasingly more accessible by the application of data and technology, enabling the creation of alternative investment strategies that provide consistent, risk-adjusted returns with a low correlation to traditional investment markets.

At CFM, we believe that:

  • A systematic approach provides the best access to de-correlated returns
  • Research and development is necessary to maintain continued value for investors
  • Risk management is of utmost importance
  • Diversification works

Our unique focus positions CFM as a leader in the realm of quantitative, scientific investment capabilities.

SCIENTIFIC PROCESS, used to extract signals from noisy markets.

We allocate risk in an agnostic fashion to strategies, models and markets in order to seek robustness through diversification.

The systematic allocation is overlaid by pragmatic considerations such as capacity, tail risk, correlations and costs.

HUMILITY, because more than two decades of investment management has led us to conclude that there is no “Holy Grail” solution.

Our framework is one where many systems, developed by different research teams, are run concurrently, each one tasked with contributing profits to our investment programs.

All researchers, including senior members of the team, are expected to be involved in day-to-day details.

ALGORITHMICALLY MANAGED RISK, through strategy-appropriate, coded risk parameters.

However, on occasion, we have reduced targeted risks at the strategy level, either because we believe the portfolio is exposed to unanticipated external events or negative internal dynamics.

INNOVATION, through the use of applied scientific research and sophisticated information technology systems.

We believe that trading models decay over time; persistence in delivering value is only achieved by maintaining an ongoing R&D effort.

INFORMATION TECHNOLOGY, to introduce process and scalability to R&D.

Automation also enables us to diversify data, models, markets, instruments and counterparties, whilst achieving operational reliability and efficiency.

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