Giving up investment control to asset allocation formulas, WinVeston Capital is daring to tread an almost uncharted path in Saudi Arabia to rely wholly on quantitative, or quant, strategy for its latest fund, Asset Management Head Muhammad Ishaq shared with IFN Investor.
“We are the first asset manager in Saudi Arabia to be introducing the quant investment model in the Shariah compliant public fund space. Other fund managers here are hesitant to give up their discretion to manage the investing of funds.”
A quant model is a passive investment strategy that uses mathematical, statistical and algorithmic techniques to analyze data and construct an optimal portfolio of equity stocks – relying on several group of quantifiable factors.
Muhammad said the quant strategy had been implemented previously within Saudi Arabia by private equity fund managers for a short while, but those firms withdrew this adoption due to wanting faster responses for market volatility.
“I know we are risking our fund sometimes when we see glaring opportunities. But we don’t as we apply [a] quant model. It took courage for us to take a different viewpoint.” The WinVeston Saudi Equity Quant Fund is expected to be launched in the next few weeks.
Looking at potentials from alternate perspectives is a major driving force for WinVeston, a new player that obtained the Saudi asset management license in August 2024 and set itself an ambitious target of SAR1 billion (US$266.67 million) assets under management by the end of 2025 by focusing on Shariah fund innovations.
The company’s aspiration to be a significant wealth management partner is predicated on harnessing next-generation technology while also implementing resilient and tested processes to optimize investor gains.
Despite its growing AuM valuation and rising sophistication, the Saudi Arabian equity market remains relatively under researched and sentiment-driven compared to mature global markets, noted Muhammad.
Stating the market remains largely untapped due to historical performance inconsistencies, Muhammad said such a factor led to persistent pricing inefficiencies, behavioral biases and volatility pockets.
“On the flipside, this scenario has created ideal conditions for systematic strategies like the quant model to identify high-performing stocks.”
