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'Quantamental' investing is suddenly a buzzword in the hedge fund world, and we talked to the CEO of a fintech that just nabbed $8 million to help power the approach

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  • Boosted.ai, a fintech that helps fundamental managers use quantitative skills, just raised an $8 million Series A led by early-stage investor Portag3 Ventures.
  • Wall Street is increasingly looking to get the best out of both machines and humans as each have seen hiccups operating independently. 
  • "The choice of using quantitative techniques is very quickly going from a nice-to-have to a need-to-have," Joshua Pantony, CEO of Boosted.ai., told Business Insider.
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A startup that helps fundamental managers easily use quantitative skills as part of their investing strategy just raised an $8 million Series A.
The funding is further indication of Wall Street's desire to get the best of both humans and machines while investing, a strategy often labeled "quantamental," indicating the merging of quantitative and fundamental strategies.
Boosted.ai, which offers a machine learning-based platform for portfolio managers, raised the new funding from Portag3 Ventures, who led the round, along with South Korean investment company Dunamu & Partners and Canadian private-equity firm Polar Equity Partners.
"The choice of using quantitative techniques is very quickly going from a nice-to-have to a need-to-have," Joshua Pantony, CEO of Boosted.ai., told Business Insider. "You really need to have it as a core part of your business."
It should come as no surprise that Wall Street is hoping to get the best out of both sides, as both quantitative-only and fundamentally-focused strategies have faced challenges.
More recently, it's quants that have taken a bath. The market volatility of March proved particularly troublesome for computer-driven strategies, leading some experts to call for an adjustment in their approaches. And on Friday, Business Insider reported that Credit Suisse has shut down a $519 million computer-run fund.
At the same time, Adam Felesky, CEO of Portag3 Ventures, told Business Insider traditional fund managers have faced massive fee compression in recent years that is forcing them to reevaluate how they do business.
"That is a challenge," he added. "Better ways to more efficiently offer investment management."
However, enabling fundamental managers with quant tools isn't as simple as just turning on a switch. Carson Boneck, chief data officer at Chicago-based Balyasny Asset Management, spoke on a webinar in April about the challenges of incorporating the strategies.
A major part of the process, Boneck said, is about being able to find common ground between the two sides.
Pantony, whose company has more than a dozen active clients, acknowledged the role culture plays in the process. Often it's about slowly introducing new techniques that can be used, and building from there.
Pitching a portfolio manager on how they should completely change their investing strategy immediately isn't going to work, he added.
Another big benefit of the platform, Pantony said, is that doesn't overwhelm portfolio managers with complicated tools.
"Our system is extremely well-designed to be explainable," he said. "To give visibility to the black box so that you can use all the sophistication of machine learning, but now with the ability to understand what it's actually doing."
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