BNP Paribas Asset Management is the investment management arm of BNP Paribas, one of the world’s major financial institutions.
This month, Mr. Guillaume Subias from Quantilia sat down for an exclusive interview with Mr. Etienne Vincent, Global Head of Quantitative Management at BNP Paribas Asset Management.
Quantilia [Guillaume Subias]: what is your approach when it comes to quantitative investment?
Etienne Vincent: at BNP Paribas Asset Management, most of our strategies are Quantamental, which stands for a combination of quantitative and fundamental (also known as judgmental) disciplines in managing money. We make the distinction between pure quant topics and behaviourist drivers. In essence, it is a human fund manager who makes the final decision. However, this does not mean that a human fund manager should have the last say when he disagrees with the model, because this would be bringing back emotional bias into the investment process. It just means that some investment decisions are better made by human fund managers and others are better handled by systematic strategies. It’s a way of overcoming the opposition between man and machine in order to improve both.
Quantilia: you recently mentioned to me that ESG had become a core theme among your investors, how do you handle ESG investing at BNP Paribas Asset Management?
Etienne Vincent: We work mainly on a combination of Low Carbon and integration approach, rather than exclusion. Low-carbon investing is gaining ground for solid economic reasons. There are many findings that go back almost two centuries, that climate change is real and requires action now. Going back to the model, it is common knowledge that adding a constraint to an investment management process, has great chances to reduce its efficacy. Our multifactor equity strategies are managed with a DEFI model (Diversified Equity Factor Investing). The specificity of it is to offer a balanced exposure to the factors by maintaining an equal risk on each of the factors and to allow a precise control of the portfolio’s main risk parameters – beta and tracking error. Having said that, when we apply extra-financial criteria, such as environmental, social & governance (ESG) and low carbon constraints, our portfolio optimiser is able to minimise the impact of such constraints.
Quantilia: everywhere I go, I hear and I see finance professionals talking about AI applied to investment Management, Deep Learning, etc. What’s your view on those topics?
Etienne Vincent: Artificial Intelligence is definitely a subject we – at BNP Paribas Asset Management – work on and monitor. Generally speaking, researchers and managers have been defining and implementing investment strategies using Big Data for years. Quantitative asset management specifically involves the integration of all these data management techniques.
Quantilia: Your investment strategies have been onboarded on Quantilia platform. What is the main driver behind the decision to join it?
Etienne Vincent: Quantitative and «online» approach is the main progress in the Asset Management industry over the last years. A tool like Quantilia, that allows investors and potential prospects to better understand the investments ias adding a lot of value and is key to reach a larger audience.
About BNP Paribas Asset Management
BNP Paribas Asset Management is the investment management arm of BNP Paribas, one of the world’s major financial institutions. Managing EUR 416 billion in assets as at 30 September 2018*, BNP Paribas Asset Management offers a comprehensive range of active, passive and quantitative investment solutions covering a broad spectrum of asset classes and regions. With more than 500 investment professionals and more than 400 client servicing specialists, BNP Paribas Asset Management serves individual, corporate and institutional investors in 72 countries around the world. Since 2002, BNP Paribas Asset Management has been a major player in sustainable and responsible investing.
* Managing and advising EUR 557 billion in assets as at 30 September 2018
About Etienne Vincent
Etienne is the global head of quantitative portfolio management at BNP Paribas Asset Management. He is responsible for taking the best of academic research on equity and fixed income and translating it into security selection strategies. Etienne directly supervises the daily work of 10 quantitative portfolio managers. Etienne has been a ‘quant evangelist’ and an active contributor to BNP Paribas Asset Management’s Blog, Investor’s Corner before the term ‘Smart Beta’ entered our vocabulary. Etienne Vincent joined BNP Paribas Asset Management in 2004 and is based in Paris. Prior to his current role, Etienne worked as a Management Auditor for the BNP Paribas group for three years. Previously he worked for BNP Paribas in Tokyo, Singapore and Paris for five years, trading interest rates derivatives and modelling interest rate yield curves. Etienne has 22 years of market experience. He holds a BS in Mathematics from Lycee Saint Louis and a Master’s Degree in Science & Executive Engineering from Mines ParisTech. In 2012, Etienne was awarded the Financial News ’40 under 40’ award in London.
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