Quantitative Equity Investing in Global & Emerging Markets

Hi, Artemiza, thank you so much for being with me today. 

Artemiza Woodgate: 

Thank you, Elana, for having me. It's a pleasure. 

Elana Margulies-Snyderman: 

Absolutely. So, to kick off the conversation, tell us a little about yourself, your firm, and how you got to where you are today. 

Artemiza Woodgate: 

I'd love to. So, I'm a mathematician by training, and I came to the U.S. in 2000 to do my doctorate in finance at the University of Washington. Yeah, I know, that was a long time ago. But I spent basically the entire career, the entire life, including in academia, focused on research, on quant research. After grad school, the subsequent 20 years were in quant investing, first at Russell Investments, where I focused on long-only quant manager selection, and then at Man Numeric, where I was on the research team, focused again on alpha signals, portfolio construction, alternative data and so forth. 

And so, about five years ago, in the middle of the pandemic, I started IQI together with another veteran investor, Kirsten Syverson. And part of the impetus for doing that is our realization from decades of being in quant investing that there are significant problems that need to be solved. One of them is specifically the overwhelm of information, which everybody deals with, but specifically quants, they have access to a lot of data and information. And so, the question is, how do you deal with that overwhelm and identify what's relevant, where it is relevant? So, we really started out seeking to find a model that better focuses on that and creates high conviction, high alpha portfolios for the clients. 

We're actually incredibly proud of what we've built. It's been only five years, we have about half a billion dollars in assets under management across strategies in global, emerging markets, small cap, micro and so forth, and we're just very proud. Many of our strategies rank in the top decile in their respective universes, and we've obtained seven PSN Top Gun performance awards just based on how our strategies have done, so just very proud of what we have accomplished. 

EisnerAmper: 

At EisnerAmper, we are creative problem-solvers that take a 360-degree approach focusing on you. We're an award-winning firm with decades of experience. EisnerAmper, let's get you ready. 

Elana Margulies-Snyderman: 

Well, congrats on your journey, Artemiza, that started at the beginning of the pandemic. Given your focus on quantitative equities investing in global and emerging markets, I would love to hear your high-level outlook for this space. 

Artemiza Woodgate: 

Great, yeah. So, I'm going to break it down into two, first global/EM equities outlook and pockets of opportunities, and then also, let's talk about the outlook for quant investing, because quant wasn't always a hot topic. Now, it is. So, on the global emerging markets, our models prefer developed over emerging markets, with a lot of nuances there, of course. We see a lot of opportunities in the AI supply chain area and we see a lot of opportunities in the technology spillovers due to the AI advancements into other sectors and other industries. We believe that that can have a meaningful impact on the bottom line earnings of many companies across the board, so that's a great area of focus for us. 

On the quant investing side, we believe that quant investing will continue to be a meaningful way of generating alpha for clients, and the reason is there's increasing more and more data that's available, and it goes back to the problem of the overwhelm of information. It's not going to get easier. In fact, it's getting exponentially harder to really incorporate all the moving pieces and really identify what's relevant for any investor. And so, as quants, having techniques to our fingertips that can maybe statistically, with some robustness incorporated in our forecast, we can attempt to make sense, make light of where the information goes and what is relevant, that should position us for success. So, I'm very excited about continuing quant. 

Elana Margulies-Snyderman: 

And Artemiza, I know you touched on this briefly about AI technology, but I'd love for you to take a deeper dive in some of the specific opportunities you see in your investing space and why. 

Artemiza Woodgate: 

So, we see tremendous opportunities around integrating signals that are not obvious alternative data, and especially also signals that are more global in nature. One of the issues you've had historically is that you had a lot of unique data that was available in the U.S., and it's very slowly becoming available outside of the U.S. in some emerging markets and across the globe. So, making sure that you can integrate the different data availabilities, the different tax regimes, just the different nuances that are available across the globe into the model, that is very critical and we see a great opportunity in that if you're positioned the right way. 

The other one is with respect to risks. The markets are becoming very volatile, there are a lot of risks going on, and I know we'll be addressing this a little bit later on around the risks and the issues. But with those risks also come opportunities, and specifically when it comes down to identifying how to adapt to the changes in the risks. We are dealing with a diverging global market in terms of different continents, basically, taking different approaches on so many different levels, from macro, from economic outlook, from ESG, from everything, and so making sure that we can adapt to those different risks and how they're integrated, that's going to be critical to success and a great opportunity. 

Elana Margulies-Snyderman: 

Artemiza, on the other hand, what are some of the greatest challenges you face in your space and why? 

Artemiza Woodgate: 

Right. So, I'm sure you hear this from many investors, but the uncertainty around the top-down macro policy economic decision-making that is facing everybody right now, those are huge challenges because it's very hard. If you look at a dispersion among different signals and dispersion among different forecasts, things are getting muddier, and there's, again, that divergence, that bifurcation, between where you have some visibility into the forecast and you can trust that the economic or policy decisions that are made, they will stick at least for a little while, versus you have some areas of the world where they just flip-flop. And so, that makes it hard for anybody in the industry, whether it's your macro top-down economist to your quant investor who looks at a ton of data and just aggregates it into signals, to really identify where the wind's going to blow now, so then that translates into just riskiness, so those are just significant challenges. 

And maybe I should also mention, I don't want to get political, but I grew up in communist Romania and the significant challenges that we see in the world with respect to democracy, democratic norms, with respect to freedom, with respect to economic impact of top-down decisions, those worry me substantially, having had that experience live. So, I don't know, I'm hoping we're not going to look back to this period and say, "It was obvious all along, you saw the signs all along," and it's a bad outcome. I'm hoping we can work through these challenges in the world and succeed. 

Elana Margulies-Snyderman: 

Artemiza, to shift gears a bit, ESG, when you launched your firm, was very under the limelight, and I would love to hear your thoughts on that and how your firm's integrating or addressing this topic. 

Artemiza Woodgate: 

Is it more in the limelight now? I don't know. I hope it is. It should be, given just the impact that the environment and governance has on everyday life. So again, back to that bifurcation, different continents address the externalities associated with ESG differently. Some of them, you have a top-down mandate to incorporate those externalities and pay for them, so they reflect this cost. Some others are deciding now to just let loose and not make anybody pay for those externalities. So, within that bifurcation, again, it's going to be critical to understand signals, to have signals that adapt to that. We have a lot of signals, we have over 700 signals in our models that, again, where we distill what's relevant where, and so some of these signals explicitly or implicitly take into consideration this differential cost of whether it's environmental or governance cost to the companies, to the markets, to the people. So, we address that explicitly, implicitly, but we also are continuously looking for new data, alternative data, and just better ESG data that we can then incorporate into the models. 

Elana Margulies-Snyderman: 

Artemiza, being a woman in the industry is very inspiring, and would love to hear what you're doing to inspire others to also go into finance and investing. 

Artemiza Woodgate: 

Right. So, first of all, it's tough, it's not easy, as I'm sure you know and you've heard from many others. You have to develop that thick skin, you have to have a really strong sense of self-worth and understand who you are, and then really just go out there and support, really go out there and sponsor others and be involved, whether it's through mentorship, whether it's through local organizations. We have the CFA Seattle Society that is very vocal and it organizes a lot of things and just outreach. And also, just being a role model, being able to succeed and be able to show others that, hey, yeah, we can do this and it can be done. It has nothing to do with whether it's gender or color of the skin or background or anything, it has to do with how capable you are and can you prove yourself, so staying strong. 

Elana Margulies-Snyderman: 

Artemiza, we've covered a lot of ground today, and wanted to see if you have any final thoughts you would like to share with us? 

Artemiza Woodgate: 

So, thank you so much, it's been a pleasure. We will stay the course, we will continue to... Our goals are to crush the competition and deliver that high conviction, high offer portfolio for our clients, we'll continue doing that. Thank you for having me. 

Elana Margulies-Snyderman: 

Well, thank you so much, Artemiza, it was great having you. 

And thank you for listening to the EisnerAmper podcast series. Visit EisnerAmper.com for more information on this and a host of other topics. And join us for our next EisnerAmper podcast when we get down to business. 

Transcribed by Rev.com.