Video: Directional or Cross-sectional – A Matter of Choice

Man Group’s 2016 Unconventional Views video series is designed to present original thoughts and insights that challenge the consensus view. The videos feature leading executives from the firm’s four investment engines, Man AHL, Man GLG, Man FRM and Man Numeric, explaining their views on various investment themes.

Traditional quant equity businesses and CTAs are different in terms of their approach to portfolio construction. While traditional quant equity businesses aim to be market neutral and follow cross-sectional trading strategies, CTAs typically follow directional trading strategies. In this video, Matthew Sargaison, Chief Investment Officer at Man AHL, examines the key differences between cross-sectional and directional trading strategies. While cross-sectional models aim to neutralize the impact of large price moves, directional models seek to profit from large price moves during periods of market stress. Matthew notes that this distinction is critical to consider from a portfolio diversification perspective, and important to understand when analyzing results.

Past performance is not indicative of future results. The value of an investment and any income derived from it can go down as well as up and investors may not get back their original amount invested. Opinions expressed are those of the author, may not be shared by all personnel of Man Group plc (‘Man’) and are subject to change without notice.

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