- Low returns prompt move to broaden range of investment options
- Many of the new quant hires are women, CIO Haefele says
UBS Group AG doubled the number of quants working for Chief Investment Officer Mark Haefele in the past two years. He wants to hire even more.
Haefele recommends customers use investment strategies that apply techniques designed by quantitative analysts, such as complex data visualization, rather than rely on their instincts. One in 10 managers who advise clients now use such tools, said Haefele who oversees a team of more than 200.
The models “help us understand when it’s time to dial up the risk of the portfolio or dial down the risk,” Haefele, who helps oversee $2 trillion, said in an interview in Zurich. “In many cases the answer is yes, a machine could do a better job than a person.”
Banks and investment funds are hiring quants -- people with training in physics or higher mathematics -- as market intervention by central banks make it difficult to post robust profits. Money managers including UBS, Credit Suisse Group AG and GAM Holding AG are betting that the strategies widely used by the hedge-fund industry will help convince clients spooked by market volatility to invest their money instead of keeping it in cash.
The bank decided to diversify and increase the number of offerings to clients because of low interest rates, Haefele said. As part of the strategy, it raised $471 million for an oncology fund earlier this year and hired a team led by Vinay Pande from hedge fund Brevan Howard Asset Management to focus on short-term investment strategies earlier this year.
UBS manages more than $1.5 billion through quant analysis, Andreas Kessler, a spokesman for the bank, said in an e-mail. The wealth management unit started its first directly quant-based offering last year, he said.
Clients who hand over investment decisions to Haefele and his team have on average earned more on their portfolio than those who make decisions themselves, he said. That’s because they may find themselves exposed to a market downturn and fail to reinvest when things improve, he said. The bank does not disclose client returns.
Unusually in the male-dominated world of banking, many of the new quants he hires are women, Haefele said, without being more specific.
"In this war for quantitative talent, I would say that women are increasingly winning it because the numbers speak louder than testosterone," he said. “About 50 percent of the female hires that we made have a masters or better in quantitative subjects.”