At OMERS Capital Markets (OCM), we’re rethinking investments “as usual” by focusing on data and insights to make better investment decisions.
Investing on behalf of half a million OMERS members, our diverse programs, flexible strategies, and specialized teams allow OCM to successfully identify and pursue innovative investment opportunities.
At a high level, our Cross Asset Strategy (CAS) Program encompasses the investment mandates that employ multiple asset classes to achieve return objectives. It is just one of the many ways we’re driving returns for our members. The CAS team uses diverse investment approaches, including quantitative and discretionary investment styles, and implements investment ideas using primarily derivative instruments, across different asset classes. Global Thematic Return, the discretionary branch of CAS, identifies and distills evolving market themes, and the team is passionate about “connecting-the-dots” on how these markets interact.
Markets are forward looking, and investors cannot simply just extrapolate current trends. We collaborate across OCM in a process called Scenario Analysis, where we debate and assess the asset price implications and likelihood of multiple market scenarios. This semi-annual event puts us all in a forecasting mindset, and it reveals surprising investment blind spots that we may not have considered otherwise.
We’re always keeping our focus on the future; artificial intelligence and machine learning is increasingly relevant to investing as datasets explode and computation power rises exponentially with lower costs. We want to be deliberate and thoughtful in our application of this technology. Underpinning our approach is a recognition that markets are subject to the behavioral whims and idiosyncrasies of market actors, all seeking to gain an investment advantage. In the short-term, we intend to empower our team’s investment conclusions by using AI to score investor sentiment and extract hidden trends in news and research. This will be a powerful enabler to expanding our understanding of companies, sectors, and broad markets. In the long-term we expect to augment this approach with alternative datasets, which will further advance the investment insights generated by our human capital.
Our focus on technology has also led to OMERS neXt, a unique collaboration between OCM and OMERS Data and Technologies that serves as a dedicated accelerator platform to advance the creation of investment knowledge and insights. OMERS neXt combines the know-how of market practitioners and technology specialists, to actualize the use cases described above. One of the projects, the Market Emotion Whisperer, analyzes current sentiment in the market, which is crucially informative to the eventual market reaction of new information. Similar projects in predictive analytics are in development.
At its core, the key to investment management is the simple notion that we can only manage what we can measure. Thus, measuring the host of investment metrics is critical and we are accelerating the technology to hasten our insight generation process. Examples span from using alternative market liquidity pools in trading, building knowledge platforms to reduce the friction in accessing our bounty of investment research, to “fingerprinting” the style and macro sensitivities of investment portfolios. The key is not to be prescriptive at the onset in how we leverage data, but instead adopt an ethos of constant experimentation. The investment world is dynamic…and our approach should be the same.
Data and insight capabilities will continue to drive new ways of investing, making the capital markets more exciting than ever. Looking to the future, we see data and data science as core to how we invest. Being able to experiment, triage, and filter out data to build investment theses will be increasingly sought after. Those who are able to successfully merge investing and technology will be amply rewarded.