Our Quantitative Investing Portfolio Performance Update

Irving Soh
Irving Soh

Editor’s Note: Dr Wealth teamed up with ex-hedge fund managers Patrick Ling and Lim Eng Guan because we had a simple agreement.

Both parties believed retail investors can do better, that retail investors are as a majority under-educated with relations to finance, and that in truth, investing does not have to overly complicated.

Thus, with the years of performance and the wealth of experience, the Quantitative Investment Course under Dr Wealth was born.

It primarily focused on 3 points.

  1. Safely generating consistent 10-15% returns every year for the long run
  2. Generating returns with less volatility (meaning the portfolio values don’t swing too much so investors can sleep better at night).
  3. Have an process built into the investment approach such that the investments of our students/graduates are protected versus broad market drops such as the 08/09 great financial crisis.

Portfolio Performance ytd 2020: +4.9%
Since portfolio inception Nov-2019, +7.8%

Portfolio is leveraged at 1.6x.

Backtested Performance

Portfolio is leveraged at 1.6x.
  • Note portfolios are always leveraged @ 1.6x. If you have $10,000, you borrow $7,000 from the broker to magnify your gains. But note your losses are also magnified.
  • Notice in 2008, markets dropped 50-70% generally, but the portfolio lost just 5.7%. That’s the kind of safety we’re looking for in the Quantitative Investment Course. We just want slow, steady gains, compounded year over year into massive wins, while protecting against big drops.

I’m actually rather happy with this performance. Why? Simple. The portfolio held steady and didn’t really move even with the coronavirus fears. For comparison, mine swung from 20-50% up to 20% down and now to about 13% down. Mine’s fairly concentrated though so maybe that’s not a fair enough comparison. Broadly, market indexes dropped, but the strategy stayed strong, and that’s what I’m most impressed by – delivering positive returns when markets are down is key to long term investing even if few people understand it.

Who is this for?

Quantitative investing sounds tough. Most people misunderstand it, thinking they need to be quantitative specialists and understand topics such as machine learning or python or advanced statistics.

Yes. Those help. Absolutely. But they are not necessary.

In fact, what people will need more than ever is the ability to withstand greed.

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Numbers posted here aren’t out of this world fantastic. Lots of people I’ve spoken to will be tempted to go to a strategy where the returns are faster and come in more frequently.

With $20,000 starting capital and contributing $2,000 per month, given the above performance, you would have had $937,208.51 by 2019 over 13 years. more than enough for most people to retire. The question is, are you the patient type?

If you’re not, this isn’t for you. This style of investing was meant to drastically reduce risk and to deliver returns over time.

In fact, this is for;

  1. People who know they need to invest but want to sleep well at night
  2. People who can understand that compounding 15% in the long run leads to truly massive wealth generation akin to Buffett
  3. People who also understand that you need to be guarded against sudden market financial crisis.

All in, I believe quantitative investing has a lot to offer to those unfamiliar with it. It’s meant to safely compound wealth while avoiding large market drops. If you’re the kind of investor capable of investing long term, this is for you.