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2min chapter
Catastrophe Bond Crash Course: Man AHL's Tarek Abou Zeid & Andre Rzym | #547
The Meb Faber Show - Better Investing
Exploring Systematic and Discretionary Investment Strategies
This chapter explores the impact of unpredictable weather on investment strategies, contrasting systematic and discretionary investing. The speakers argue for the potential of systematic investing, particularly in illiquid markets and through innovative products like catastrophe bonds.
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Speaker 3
Very cool. Well, it's weather. So if we know anything, it'll be unpredictable. So we'll check back in with you guys as the months and years progress. And this doesn't have to apply to cap-ons. So this can be anything in the umbrella world of investing. It could be crypto. You guys go to the pub after this tonight and are chatting around with a bunch of your buddies in London about investing. So as to be an investing topic, what's something that you say, Andre or Tarek, where you blurt this out, take a sip of some warm British beer, and then everyone shakes their head and say, I don't agree with you. So about 75% of your peers in the investment professional world would disagree with. Is there a belief you have that would fit?
Speaker 1
When it's investing, you can group it broadly into, one way of grouping is into systematic versus discretionary investment. Both are well-established and both are well-respected. But I do feel that systematic investing has a way to go in terms of its coverage throughout the financial markets. And the two doors that I feel that it's pushing against are firstly where systematic meets a discretionary investing. Is there more currently discretionary activity that systematic investing can embrace? And the second is liquidity. If you think of e-liquid private equity type investments, is there a way of applying systematic investing techniques to these less liquid assets? And I think cap bonds are maybe a step in that direction, but I do feel that there's further to go.
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