What does Innovestment do?
Innovestment conducts research and development focused on improving investment management practice and investment returns. It sells or licenses the intellectual property it develops to financial services firms (such as hedge funds, portfolio managers, and ETFs).
So, you don't have products or services for individual investors?
No. Individual investors can apply a lot of the content that we publish, but we do not develop IP for sale to individuals.
Does the R&D focus on a specific style of investing, such as momentum or "smart beta"?
Although some of the R&D has applications across any investment style (such as forecasting techniques or risk management approaches), we are focused on improving value investing practices and the returns to value investing.
- transforming various data sources (such as company financial statements or industry analyses) into frameworks and models that support a valuation
- quantitative techniques that systematically calculate values (such as a PE ratio) to determine if they meet or exceed a threshold that would warrant an investment
Over time, data has become more diverse (such as using satellite imagery to analyze retail store traffic or using text messages to perform a sentiment analysis) and analyses more sophisticated (such as using natural language processing, a machine learning technique, to extract data from thousands of sources), but the basic approaches remain the same.
Once prospective investments have been identified, portfolio management techniques can be applied to reduce risk and enhance returns.
Our R&D focuses on these three areas:
- We work to enhance traditional value investing analyses, with an emphasis on creating tools that are appropriate for technology-driven companies.
- We develop quantitative techniques that support both traditional analyses and systematic (algorithmic) approaches.
- We develop portfolio management techniques that enable better performance under specific optimization targets (such as variance or return).
If we succeed in each of these areas, we will achieve our goal of improving value investing practice and the returns to value investing.