The Ledger
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Braga: Fearful discretionary traders derisk while systematic algorithms short
“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 short.”
Braga: Hiring quotas cannot solve female underrepresentation in finance
“You can't fill the positions based on quotas. So you need to go upstream from the problem and encourage more women to get qualified.”
Braga: Trend following is portfolio insurance investors get paid to hold
“That strategy in itself has positive expectation of return. So this is a bit like the insurance policy that I get paid to hold because the thing will have positive expectation of return. And yet when the rubbish hits the firm, I expect it to help my portfolio.”
Braga: Alternative datasets suffer from forecasting decay and become worthless over time
“Some of these alternative quirky data sets, their forecasting ability has a bit of decay. So they forecast for a while and then they become worthless.”
Braga: Investing in China is a no-brainer for large allocators
“And so we've really made a push into China. We've started our Shanghai office. And so China is, I think, a no brainer.”
Braga: Multi-manager platforms enforce siloed teams that hoard intellectual property
“The platform approach is naturally, from what I gather in the industry, is naturally a more siloed approach, right? Is the small team that wants to do their own thing and keep their own intellectual property and not share with anybody else.”
Braga: Unwinding during drawdowns stems from poor upstream risk sizing
“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 being related to unwinding strategies in the drawdown. Then you say, okay, what is the mistak…”
Braga: Systematica sees very few women apply or interview for investment roles
“Very few women on the investment side, and they don't even turn up to interview.”
Braga: Post-2008 PCA on liquid futures reflects risk-on, risk-off moves
“So for example, since the financial crisis, if you pick up the securities, the generic macro securities, the hundred or 150 liquid futures markets, and if you do a bit of principal component analysis on them, the first principal component looks like a risk on,…”
Braga: Electronic markets enable large trades without leaving a market footprint
“Markets have gone very electronic, and so it's possible with good techniques to trade large positions without revealing a footprint, and that's great.”
Braga: Strategy construction should prioritize diversification over target returns
“Well, if you control the vol, 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 returns.”
Braga: Systematica's Chinese equity strategy is focused on ESG
“So for example, we do equity work in China on an ESG basis. So our offering in equity to China is a naturally ESG focused offering”
Braga: ESG implementation in China is twice as challenging as developed markets
“Doing ESG in the developed world is a big enough challenge because
The data needs to be cleaned up. It's 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.
Sourci…”
Braga: Senior leaders must say 'no' to opportunities in an organization
“In the list of opportunities that present themselves to an organization in business, the no's of the organization need to be said at the senior level. And junior people are never going to say no.”
Braga: Systematica successfully fended off a sophisticated cyberattack
“There was an attempted attack here a couple of weeks ago. Nobody fell for it, but it was a very sophisticated attack.”
Braga: Resilience is the core entrepreneurial trait because hard work still fails
“I think 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 acc…”
Braga: Overfitting data is the biggest sin for systematic traders
“Well, for the systematic trader, it's overfitting. It's just looking at all the data that you know is filled with randomness and coming out and say, ah, this is going to be a brilliant strategy and it's going to perform right. So overfitting to the data and th…”
Braga: Engineers focus on practical problem solving unlike pure mathematicians and physicists
“Engineers are the guys who want to solve the problems that people have, right? And then so they often look around in a university, you kind of sense that difference that they're pure mathematicians, they're physicists. And then the engineers, the guys who real…”
Braga: Systematica seeks to process 50 to 100 new datasets yearly
“Just this morning I was having a meeting here about how do we enlarge our capability to process 50 to a hundred new data sets per year.”
Braga: Cyberattacks are the biggest external threat to Systematica
“What keeps me awake at night is a cyber attack, okay? I'm petrifying. We, over here, we spend so much effort in tightening up cybersecurity of our firm, educating everybody on cybersecurity.”
Braga: Resolve difficult conversations before answering morning emails
“So I don't ignore conflict. I don't Run away from difficult conversations. I, 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 ma…”