Quantitative Investment Strategies：Opportunities in Quantitative Investment Strategies After Recent Market Volatility

Investment Rating - The report maintains a positive outlook for certain Quantitative Investment Strategies (QIS) while being less constructive on FX DM Carry and Equity Momentum [1][9]. Core Insights - The report highlights a shift in the investment hypothesis characterized by lower monetary policy rates in many countries and a soft landing for the global economy, albeit with increased uncertainty [1][2][7]. - QIS strategies are expected to perform well in the current environment, particularly in Rates Trend, Rates Long Straddle Replication, Equity Value, Equity Quality, and Equity Relative Value and VIX Volatility Carry [1][13]. - Conversely, FX DM Carry and Equity Momentum are anticipated to face challenges due to recent market volatility and changing economic conditions [1][35][36]. Summary by Sections Backdrop - Recent market volatility was influenced by soft US employment data and disappointing ISM Manufacturing PMI, leading to increased uncertainty about economic growth and a higher probability of Fed rate cuts [2][5]. Fundamental Outlook - The Chief Global Economist at Morgan Stanley expects a soft landing for the US economy, with policy rates projected to end 2024 at 4.625% in the US, 3.25% in Europe, and 0.25% in Japan [7][8]. QIS Performance - Year-to-date, QIS strategies have delivered an average performance of +2.2% annualized, outperforming the long-term average of +1.8% [9][10]. - Specific strategies like VIX-based convex strategies and Low Risk in equities have performed well during recent volatility [10][24]. Strategies Expected to Perform Well - Strategies expected to excel include Rates Trend, Rates Long Straddle Replication, Equity Value, and Equity Quality, driven by favorable market conditions and a robust quantitative approach [1][13][18]. Strategies Expected to Face Challenges - FX DM Carry has underperformed, primarily due to a short position in JPY against USD, while Equity Momentum is expected to deliver below-average performance amid heightened market volatility [35][36].