YouSaid · the spoken record

Leda Braga

lines on the record: 56
first: 2021-09-09
most recent: 2021-09-09
sittings or episodes: 1
sources: podcast

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“The expectation was always that we would all do a very good job no matter what we did. That was always the expectation. And there wasn't ever any push on this career, on that career. So just an expectation that if you're doing something, really try to do a good job. My mother would say, it doesn't matter if you're going to clean the streets. Just clean that street so that it's perfectly clean. And I guess that is what has stayed with me, that the idea that you can get satisfaction from just about anything through excellence if you do a very good job”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Career wise, in the running of the various strategies that we have run over the years, the mistakes that I have made, which I regret, have almost all of them probably been related to unwinding strategies in the drawdown. Then you say, okay, what is the mistake then? Is it because you lost confidence and unwound in the drawdown? I guess, no, the mistake is actually upstream from there where you were probably not running the risk that you should have. Because if you're running the right amount of risk, you can stomach the drawdown. I guess as a generalization, that is probably the interventions that I would have regretted.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably stumbling on happiness. So stumbling on happiness is written by man called Daniel Gilbert and he's a Harvard professor and stumbling on happiness talks about the objective of life at the top level, like top node of the tree of possibilities is to be happy. So like, you know, you lift him. So how do you make decisions in your life under this utility function of being happy? And he's sort of analyzes all the cognitive biases that we all have when we make decisions about our lives. And basically, the book is sort of saying that, you know, you sort of stumble on happiness, really, because your decision making process is not very good. I guess I read this book many years ago and I've given it to many people since. And now that I've made a bit of a career as a systematic trader, I think it's all related, isn't it? It's like making decisions.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“For the systematic trader, it's overfitting. It's just looking at all the data that you know is filled with randomness. Coming out and say, Oh, this is going to be a brilliant strategy, and it's going to perform. Right. So overfitting to the data and therefore setting yourself the wrong expectations, that is the biggest sin.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think cynicism, I had a colleague who used to be always very sarcastic in his comments, very cynical about all the things that we're trying to do. And once it came appraisal time, and I said to him, how about you write me two paragraphs on how cynicism and leadership interact? What do you achieve with sarcasm, cynicism, and pessimism? I don't know, maybe come in naive, but what do you achieve? So yeah, we all have a moderate amount of it in our personal portfolio and a small amount of everything in your portfolio. We've talked about that iscaations. That's a good thing. But it's not something that I think is productive, doesn't achieve much. So there you go.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's somewhere between this idea of exercising and keeping fit, but also this habit of doing the hard things first. We all want to be busy. have a good day doing whatever what we're doing it doesn't have to be work but just tackling the difficult things head on and just not running away from them and often once you've tackled them they will feel a lot easier than you thought like you know the emotional cloud that you build around the things that you think are hard to do is often a bit out of proportion isn't it”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“The favorite activity for me is fitness in general. I try to exercise with age comes the realization that the only thing you can do is to stay fit. And I take great pleasure of exercising, cycling. There are other fitness related activities that I used to do more of in the past that have become a bit more difficult to do. For example, I love scuba diving. I've done a little bit of rock climbing and I like that as well, but a bit more specialized. in systematica. The guys have come up with an initiative that they call system action. And so they have group activities of all sorts. Look, eight of them took part in the Tour de France. They took part in the tap where they admit amateur cyclists, right? So they. They are really committed athletes here, and so the system action is a thing here”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“But in the medium term, potentially tense conflicting interests and gets them to have a really constructive dialogue and sort things out. That is fantastic. And as you know, the quality of the work, the quality of the suggestions and the materials and the protocols that come out of the SBAI is outstanding. It's really outstanding. So that's an easy one. It's just a great organization.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“The SBAI is so unique. It puts together the managers and the allocators around the same table. And these are people that whose relationship has some natural elements of tension. The allocators, they want better returns, lower fees, the managers want support for the tough periods and the managers see all the randomness that they have to deal with and all the competition in the market. And the SBAI then. provides a forum for Constructive set of practices, and that's fantastic, right? One industry wouldn't want that. Imagine, I don't think of another industry where that exists. If you think about it, the car industry have their own lobbying people and the regulators of the car side, the oil industry. But I mean, you don't necessarily put two groups that have common goals.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Resilience is perhaps the most relied upon attribute of the job of the entrepreneur. And this is probably why the man in the street is not an entrepreneur, right? The man in the street likes to do a good job every day, get paid and feel a sense of accomplishment. And when you are an entrepreneur, many times you do all the right things, you work super hard and things just don't work out. And being able to survive that.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is not a direct threat to us in the sense that they are different, and time will tell which business model, you think about the intellectual property that we've developed here over the years, that intellectual property, that body of work is the reason why I can easily step away and somebody else can succeed because they can pick one up and that thing has a life of its own now. There's a coach, there's a body of IP and that thing can carry on. If I had been the Lady Braga and David Kitson's show running $100 billion, that wouldn't have happened, right? So we will see where that goes. In terms of entrepreneurial advice, oh my goodness, the Lindebrag of 2021, just tell the Lady Bragg of 2000 that there's a lot of hard years ahead, you know. They always come and they always hard, I think.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the both form thing is fundamentally different from the way that we run our team here. We run our team on a much more collaborative framework where we really try to train up people and to share knowledge. Yeah, we don't go off and equip every person in the research team without the most confidential notes. We don't do that. But people have access to knowledge and they are trained now to achieve the best that we can. So the platform business model.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“The platform approach is naturally, from what I gather in the industry, is naturally a more siloed approach. The small team that wants to do their own thing and keep their own intellectual property and not share with anybody else, we live in a world where the risk free rate is zero, sometimes negative. The investment problem is perhaps bigger than ever with an aging population in most developed economies. Pension funds need efficient investment. They need low fees. How do you achieve low fees in a good investment process? It's a scalable process. There's no other way. If you're going to do something in a scalable way, you don't want to have John, Mary, Paul and Claude, each one doing a different thing and each one, you know, no, you want them to get in a room, go through the pain of achieving some consensus and deploying the best thing possible.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“I am actively discussing succession planning with my colleagues, with the board. So that is another big challenge for me. But that one is organic. It's not an external threat.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Nowadays, I do have an answer to that, a very clear answer. What keeps me awake at night is a cyber attack. I'm petrified. We over here, we spend so much effort in tightening up cybersecurity of our firm, educating everybody on cybersecurity. We have a monthly meeting of the firm tomorrow. It's the first Thursday of each calendar month. We have a monthly meeting. Sure enough, there's going to be a case study because, you know, there was an attempt at attack here a couple of weeks ago. Nobody fell for it. But it was a very sophisticated attack. So cyber attacks really worry me. Then if you think more like a cyber attack is an external threat, if you think more organically, I worry about succession. I've been CEO of the firm since the beginning. We are now year seven.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Use it humbly and responsibly. Even, for example, if I think there is a problem in the organization or there's a problem with a staff member, a problem with the team, even the way I ask questions can shape the answer. So you've got to be tactful and clever about these things. You've got to listen, listen, make up your mind. And if you walk up to somebody and if you ask the question the wrong way, you're going to get the answer that you thought you were going to get. And so to deal with the assignment with great respect and great responsibility, right? No other way”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“The list of opportunities that present themselves to an organization in business, the nose of the organization need to be said at the senior level. Junior people are never going to say no. If you ask them to do something, they'll try to do it. They'll try their best. In general, people think it's a good thing to be a can-do person. And to try to do everything is not a good strategy. So I often say, look, the nose of the organization need to be said at the high level. I see my job as having the very long-term vision, the keeper of the long-term plan. I also see myself as the one that takes away the pain when we have to say no because she said no. So she said we're not doing it. So that's okay. We're not doing it as opposed to leave it to the organization to not be able to accomplish something. And then when you are in a position of leadership, whether you're qualified or not, that position in itself grants you power, right?”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“I will tell you what, I don't think I need very much more of is to be the best technical person around because as I said to you in the beginning of this conversation, a lot of them are so much smarter than me. So what makes a good CEO? I think you need to look further than other people. Everybody else has the privilege or the treat of being able to look ahead a day's work or a week's work. I need to look at a year horizon, a five-year horizon. So it's got to retain that you've got to be the five-year person because everybody else is very content celebrating a good week's work. And if all these weeks line up in the wrong five-year direction, you're in trouble. So it's the long-term view. I also often say that”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“A number of other initiatives on the ESG front concerning controversies, concerning governance. And as I say, doing ESG in the developed world is a big enough challenge because the data needs to be cleaned up. Often it's self-reported data. Therefore, it doesn't experience that much scrutiny or criticism. But doing it in China, you double up the challenge. Sourcing the data is hard, expressing it, cleaning it up, but we're doing it anyway. So I think it's absolutely the right thing to do. I wish more people in the industry would take it up and run with it. And as I say, as an industry, we can really change things here, right? Just think about the pressure that has been put on companies that have hit the press on the way they do business and the way they treat their employees.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Pension fund for not investing his pension money with enough regard for the future of the world and his future. And actually they settled out of court. So it's not only a great way to promote sustainability, to sort of be the investor that says, sorry, but you've got to do business in a sustainable way. Otherwise, I can't invest my money in your company. But it's also a responsibility for the longevity of the investment. You know, if you're running a pension fund, decades of return. And so we started back in the day, I mean, right off from the spin-off or even a bit before, we were already implementing a number of exclusions in other portfolios that we run. But then that evolved into incorporating ESG scoring in the construction of the portfolios. And so there's ESG scoring, there's carbon emissions. Now, just this morning we were discussing.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“I've become a big supporter and a big believer in the role that our industry can play in ESG. Sometimes I joke around with the guys that if you're really worried about sustainability, what are you going to do? Are you going to donate to a charity? Are you going to go on a protest march? How about you join the investment management industry? Because you know there's about 70, 80 trillion dollars of professionally managed assets worldwide if our industry puts its foot down and demand sustainability from businesses, there is just no way businesses are not going to respond. Of course, every CEO will respond. And so I do think that the way to make a difference is that another case that I often quote. So there's this case of this man called Mark McVeigh, an Australian young guy brought a claim against”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“No brainer, and then there's a very positive aspect of investing in China, which is engaging with China. China needs the West to prosper and in order to grow further. And if the West engages constructively with China. So, for example, we do equity work in China on an ESG basis. our offering in equities China is a naturally ESG focused offering because we can feel gosh you know if you can give the message to the ceos of Chinese companies that they need to do business sustainably that's very powerful”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Because it's not like every time we deal with a new alternative market, we have to hire another person. So given the realization that we are okay at alternative markets, that seems to be a competitive strength of ours. The next thought was China is the ultimate alternative market, isn't it? And can't even read what they write. So time zone is difficult, legislation is difficult, the regulatory environment is difficult. At the same time, it is an enormous economic force in the world. And so a minute ago we were talking about how large allocators, large pension funds have to have a big chunk of their portfolios in stocks. But if you have a lot of stocks, I'll bet with you you are sitting in an investment committee discussing how much China you should have. And so we've really made a push into China. We've started our Shanghai office. And so China is, I think.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“China is an interesting topic in its own right. We systematically, we've got a bit of history now, so we are in year seven of the operation. And I think looking back at how we have done and how we have fared in the various initiatives we've undertaken, I think it's fair to say that we do okay dealing with complexity. So we've done quite a lot of work in what the industry refers to as alternative markets. Alternative markets are markets that are either nascent or a bit more difficult to trade or the data is a bit more difficult to obtain. And we are quite active in these markets. And I see that we've done it successfully because we have done it. We have some offerings that have grown in those areas, but also we have been able to deal with that complexity without a huge increase in staff numbers. So that kind of tells me that we are equipping ourselves with the right technology and the right approach.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have also very openly looked into new techniques, using them, incorporating them in what we do, a bit of machine learning here and there, some bits of certain algorithms lend themselves to some fancier techniques. So we've done that too. Just this morning I was having a meeting here about how do we enlarge our capability to process 50 to 100 new data sets per year because another thing that we seem to have learned is that some of these alternative quirky data sets, they're forecasting ability has a bit of decay. So they forecast for a while and then they become worthless. And so as a farmer, we need to speed up the processing and implementation of the alpha sources that rely on these data sets. And we are making active changes to the way that we...”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Out what the data is saying, right? So I remember hearing the phrase data driven decision making. And I kind of said to myself, data-driven decision, is there any other kind? And I kind of thought, lay the how stupid can you be? Of course there's another kind. Most people make decisions based on emotions. Most people do not make their decisions based on data. So people have been.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“A positive thing. There's more interest in the discipline as a whole, there's more tools, there's a specialization of mathematical techniques for data analysis. There's a whole number of what we call alternative data sets, so specialized data sets, imagery, clicks on a web interface or credit card data. So there's a whole number of small companies appearing everywhere whose job it is to repackage and to do a first round processing of these alternative data sets and try to monetize them. So that has been a very positive thing. Another positive aspect of this AI wave is that people have become more comfortable with algorithmic approaches to things and they kind of know that you want to go to a place and you don't know what the traffic is going to be good or bad. It's a good thing to look at your app and try to work.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“The wind of change that you refer to, they are all tailwinds for us. They help. So first of all, this whole articulation of the field of data science, that's fantastic, right? You can walk up to a campus in a university and you can talk about how what we do is data science, investment management. And I attended a conference in Stanford a while ago and I remember there were some other speakers from other industries, telecoms and pharma. And the conference was about data science. And the speaker stood up to say how they were using data science to enhance their performance. And I kind of stood up and said, well, our business is data science. There's no enhancement function here. This is what we do. We look at data to make investment decisions. And so that has been.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Like the way you're framing this, that actually debunks a lot of the myths about hedge funds, but also specifically like frequent managers, people forget how Managers of your strategy are risk manager to start with. So they're good risk manager at like the way you're framing this. I've been reading a few books in the last year. The first one from Head Dorpe, a man for all markets, and the second by Greg Zuckerman, the man who solved the markets, which depicts the rise and evolution of the medallion fund with Jim Simons Renaissance. In both these books, it is fascinating to see the ebs and flows of quantitative strategies over the last 50 years and how managers have had to adapt in order to evolve. Now quant strategies have had some challenges in the recent years with the arrivals of AI, big data, and lots of competition. How has this changed your sector and how do you address these changing wins?”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“We do, and I mean, you don't have to go far to find examples of people neglecting that so badly. So diversification is for certain. Returns are forecast. I'd say that that is the principle as to how we look at expectations of return.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the correlation profile between strategies and between markets is something that is more likely to stay the course than the actual return. Okay, so now what does that point to? If you control the vault and you know the correlation is more persistent than returns, then your portfolio construction and your strategy construction should rely more on diversification than on target return. And that is a principle that we live our investment lives by over here, you know, just a diversification is for certain. Returns, they are forecast, they hopefully realize over the long term, but it's very hard. So in answer to your question, how do we look at expected returns of our strategy? Expected returns are a long-term character, really, a long-term attribute. And I'm sorry, we need to be patient. And diversification always pays off. Diversification is one of the pillars of the things.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, a good year for us is a year where clients are happy, right? How do we think about expectation of return? First of all, there's the realization that when you design and implement an investment strategy We feel able to control the risk delivered much more tightly than we can control the expectation of return or the realized return. It's like how much fuel you put in the engine, which is the volatility that you target. Whether you're going to get the return or not, you're relying on sometimes a long period of time to see that long-term expectation of return come to fruition. So first comment is we control the ball deliver. We control the risk target rather than the expectation return. Second comment is, whichever way we slice and dice the data, correlations are always more persistent than returns.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“You think about being an engineer? I don't know, working for BMW building cars. If you deploy better materials and you do good techniques, good design, your car will come out better. In finance, there's just so much randomness in markets, right? So you're always fighting with the randomness of the market itself. That is very hard.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“market participation broadening and so people that are more attuned to the news rather than the fundamentals and so then oh my goodness it's a risk of they take risk off the crisk off and so that is one difference another difference that we notice is we can markets have gone very electronic and so it's possible with good techniques to trade large positions without revealing your footprint and that's great so people sometimes say oh, you know, people are moving the market, CTAs are, no, they're not. And then you can kind of look at the data and argue that. But, you know, apart from these odd realizations, as a broad answer, There's so much randomness in markets.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Have a simple numerical answer to offer to that. Like, you know, people say, oh, the regime has changed. Well, what is the regime? Do you have a variable that we can measure? I think there are a few things that you can say that you see now that you didn't used to see then. So for example, since the financial crisis, if you pick up the securities, the generic macro securities, the 100 or 150 liquid futures markets, and if you do a bit of principle component analysis on them, the first principal component looks like a risk-on-risk-off move. That phrase is kind of well known, right? Oh, it's a risk on day. You know that it's a risk-off day, you know, that episode. I don't remember when I joined JP Morgan in 1993 and through the 90s ever hearing that expression, risk on risk goff. I don't think that existed. So I suspect that is a new trend, perhaps fueled by...”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“One example. So I was sitting in Blue Crest, right, at the time in 2008. In Blue Crest had this about half of the assets on the discretionary side, half the assets on the systematic side. My colleagues on the discretionary side felt even more negative about the world than us. And yet they were not short. And so human beings, I think on average, tend to take risk off if they fear. Whereas if you've got a systematic strategy, you have a good chance of carrying on with your investment process and just saying, no, no, the signal says I should sharp. Yeah, it's not great to show at the stock market. You want everybody to do well and stocks to go up. But if it's going down, then you short it. And that discipline is very hard to argue emotionally.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Prove it, you can't prove why, but you can kind of infer that it's the discipline of the trading plus the level of the diversification of the strategy that really confers the properties that the strategy has”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Was your teacher? In fact, at the time, the oil price movement. was a little bit of a case study for us where we showed because okay so if you think about the strategies that i've described which is oh you know measure the trend and then buy the things that are trending up sell the things that are trending down this all goes very well while it's trending right the problem is the reversal you can tell that just from this conversation and we have a few techniques within our models to to mitigate and to manage the reversal And I remember the oil prices had a very sharp reversal in the summer of 2008 and we lost money, but we mitigated that loss. And I remember building a slide to exactly show what had happened to opposition. So we started cutting the long positions before the reversal in that case. So it was an interesting case. But then you could also say, why should Trend following mitigate equity drawdowns? They want. That's the million dollar question, right? Because...”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“I remember also in 2008, people have in mind the movements in equities and in bonds, but also people forget about the large moves that we had in commodities like oil, for example. First part of 2008, we had this long uptrend on oil, and then we had the turnaround in the summer and then oil collapsed during. And if I remember well, because we had many CTAs back in the days, this was a big P&L contributor as well for the strategy.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so that is why people like trend following. It's not a particularly pleasant ride, the shop ratio is not very high. So you need to size it appropriately and you need to trust it and trust your manager to get on with it, to live the discipline. But as a CTP showed back in the day, it was a good decision and it added a lot to the portfolio. It added a lot, for example, in 2008 where equities suffered a lot. So if you had a 10 or a 20% allocation to a good trend follower in 2008, that really helped you draw down.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Like the insurance policy that I get paid to hold because the thing will have positive expectation of it done. And yet, when the rubbish hits the fern, I expect it to help my portfolio.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Baseline meal, if you like, in the stocks, and then you put a bit of sauce with this drawdown mitigation. And trend following as it comes to be clear is a very respectable contender for the class of drawdown mitigators. There's other things you can do. You can buy options or you can rely on government bonds to mitigate or drawdown or you can rely on credit. But all of these things, not that guaranteed. in the case of options a very costly strategy to run because you pay option premium it goes away and if that stock market doesn't have any stress then your money is gone and so people rather like the idea of putting a strategy in the portfolio that mitigates the equity drawdown and at the same time that strategy in itself has positive expectation of return so this is a big”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Want this kind of If you are a large allocator, a large pension fund or an endowment, you're going to deploy your money, you need to invest your money, you might have illiquid investments, but if you have liquid investments, then the stock market is, of course, one big place where you're going to have to go because the stock market is the barometer of economic activity and wealth creation worldwide. So I need to buy stocks. So I'm sitting on a palace. Well, what can go wrong? In the long term, stocks should deliver for you. Problem with stocks is that they have high volatility and they are subject to a lot of drawdown. Stocks have what we call negative skewness, right? So the moves down are larger than the little moves up. And so, okay, so I've got to have a pile of stocks. What else can I do to improve this? Well, if you can mitigate that drawdown of the stocks, that is superb because then you've got your...”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“The signal from the time series of prices. So you look at the time series of prices. If you think of a price chunk, you try to determine whether that price action is in a trend or not. And if that trend is up or down. And it's simple as that. So the assumption is there's a bit of forecasting power in the trend signal. All right, so then if I'm going to build a trend following strategy, what do I do? Well, I pick a number of markets that I think will compose a good offering and I will then look at the price data on all these markets and I'm going to compute a trend following signal or trend signal on each one of these markets. That trend signal will tell me which ones I want to buy and in proportion, right? It'll tell me, oh, this is a really strong buy signal. This is a weak buy signal. And then I construct a portfolio. And so back to your question. Why would people”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Trans following is an interesting segment in its own rider. We as a group of people, we do systematic strategies, so we do various different styles, but of course absolutely right that we started our collective career in trend following. And what is the power of trend following? So trend following is this very generic strategy. Let me take a step back. So if you're building a strategy, what are the two basic steps? You've got to have some form of signal. You've got to decide which securities to buy, which securities to sell. So that's signal. And then you have to size your positions. Okay, if I've now decided that these things are good for buying and these things are good for selling or these other things I don't want to touch, then now how much shall I buy? How much shall I sell? So building a portfolio, how much of it in proportion? So trend following is about extracting.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“And there's a good contribution to make, so it's very honestly just a desire to be productive, to create something good. I do take a lot of responsibility for the running of the group. You kind of see leaders, if you're put in a position of leadership, you better take it on with the full responsibilities that it brings. I don't ignore conflict. I don't run away from difficult conversations. In fact, I have this motto in the morning, you know, what are the difficult topics of the day? Let me do them first, right? If I know I have some tough conversations to have, I'll make a point of not allowing myself to reply to emails and do all the things that you do before I do the hard things of the day. Your job is to do the hard things, get on with it, you know.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“So systematically was the third startup, and the first one was a spectacular failure. Blue crest then was a much stronger outcome. And so then if you think about the context at the time, Bluerest was leaving towards becoming a family office for the founding partner. And we had this great business on the systematic side of Bluecrest, which I felt it was a very worthwhile business. It was a good proper service to the clients. It's a fantastic place where people can develop their careers and feel useful and feel engaged. I remember at the time somebody from a bank asked me, oh, is that a dream come true for you to have your name above the door? And I sort of stopped and I thought, no, I never thought about having my name on anymore. I just honestly, I just feel like, gosh, what are we going to do? We must keep this business going. There's so much road ahead.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so systematically, it was in fact my third startup in one of these conversations. In fact, it was a forum organized by a group of women. Somebody asked me, do you think preference for the high-risk startup is something that goes with the opportunity or goes with the person? In other words, do you find certain people that are always in the mood for doing that, taking that kind of risk, or do you think that anybody can take it so long as the opportunities attractive enough? I remember saying, well, I am definitely a data point for the latter because it's like I'm a serial.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“Run by 100%. That's great. I heard about that initiative. This is great work. It's interesting. I give a lecture to my Alma Matter every summer, the master's a finance degree, and there's about 25 students every year. And I've been doing this for more than 10 years now. And there's only about two or three women every year. And I always ask the question, right? It's all about rebuilding the pipeline. And our industry has been on the wrong side of history, I would say, and we need to work at it, I guess, for the years to come. In 2015, you made the decision to stand on your own feet. You started Systematica. What was the goal, the motivation back then? Why did you decided to have your name on the door and be like a full-time entrepreneur?”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so I think these three things conspire to not make it an attractive proposition. And when I see that women don't turn up to interview here, I kind of think you can't fill the positions based on protests. So you need to go upstream from the problem and encourage more women to get qualified. So I actually participated, I help with all I can a program called Math for Girls, which is run by 100 finance and they visit schools and they talk about they try to encourage, demystify careers in mathematics.”
2021-09-09 · Capital Allocators · Leda Braga – Systematica Investments (Manager Meetings, EP.10) · IDENTIFIED FROM THE TRANSCRIPT · source