Combining qualitative and quantitative approaches

There are different ways to generate investment insights. The manager universe can be segmented into two broad approaches: qualitative management and quantitative management. Each has its own strengths and weaknesses.

A qualitative approach depends on a manager’s assessment of the intrinsic value of a share based on a range of factors, such as, forecasted sales growth, profit margins, capital requirements, business risk, capital structure and the relative value of the company. As such, qualitative analysis is inherently forward-looking.

A quantitative manager aims to generate excess returns by analysing historical data for trends and patterns that have provided profit opportunities over time. In this sense, quantitative management is a systematic and repeatable process.

Markets, however, are inherently dynamic and what worked yesterday is not guaranteed to work tomorrow. Quantitative managers must therefore dedicate time and resources testing their investment insights to ensure they are capturing true and sustainable insights.

We believe a manager that can apply both a qualitative and quantitative approach is better-positioned to deliver stable outcomes to clients. Utilising both approaches delivers real synergies. The different insights generated provide diversification benefits to clients. Quantitative models depend on quality data. A qualitative team can provide context around the numbers. Qualitative managers can also do the on-the-ground due diligence required in less well-researched areas of the market. Likewise, a quantitative process can impose stricter risk management and analysis of investment decisions on qualitative ideas.


  • Important information
    This information is issued by Commonwealth Private Limited ABN 30 125 238 039 (Commonwealth Private). Commonwealth Private is a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124 (Commonwealth Bank).

    Commonwealth Private Bank team consists of a Private Banker who is a representative of Commonwealth Bank and an Investment Adviser and Financial Adviser who are representatives of Commonwealth Private.

    Capitalised terms in documents have equal meaning to the capitalised terms in the Product Disclosure Statement (the PDS). Unless indicated otherwise, any amounts stated herein are expressed in AUD.

    The information has been prepared for general information only and not having regard to a particular person’s investment needs, objectives and financial situation. Before making a decision you should consider, whether an investment in BlackRock Long-Short Active Capital Fund is appropriate in light of your particular investment needs, objectives and circumstances.

    The terms of Offer are set out in are set out in the PDS dated, 22 May 2008. We recommend that you read the PDS before deciding whether to invest. Applications to invest can only be made on an application form attached to or accompanying the PDS. You may obtain a PDS free of charge by calling your Commonwealth Private Financial Adviser.

    In receiving this information you represent and warrant that you will not distribute it to any person outside of Australia.

    This information has been issued by Commonwealth Private for its clients based on information prepared by and/or received from BlackRock Investment Management (Australia) Limited (BIML) and their respective affiliates. We believe that the information herein is correct and any opinions, conclusions or recommendations contained in this brochure are reasonably held or made as at the time of its compilation, but we make no warranty as to the accuracy, reliability or completeness of that information. Neither Commonwealth Private nor Commonwealth Bank have independently verified the information given in this brochure Except to the extent that any liability under any law cannot be excluded, no liability for any loss or damage which may be suffered by any person, directly or indirectly, through relying upon any information or statement in this brochure is accepted by Commonwealth Bank, Commonwealth Private or any of their directors, employees or agents, whether that loss or damage is caused by any fault or negligence on their part or otherwise. Commonwealth Bank and its subsidiaries do not guarantee the obligations or performance of Commonwealth Private or the products or services offered.

  • Disclosure of fees
    Commonwealth Private is promoting the Fund and may receive fees from BIML for this service of up to 2.0% from the gross proceeds procured by Commonwealth Private. Commonwealth Private or one or more of its associates may perform, or may seek to perform, other financial or advisory services for the entities mentioned in this email, or its associates and may have other interests in or relationships with BIML or its associates, and receive fees, commissions or other compensation in such capacities. Commonwealth Private or one or more of its associates has received fees, commissions or other compensation from entities of BIML or its associates in the past 12 months, and expects to be entitled to receive such fees, commissions or other compensation in the future, including the fees referred to above.