BNP Paribas hosted its 8th annual Quant Forum, bringing together leading academics, industry practitioners and BNP Paribas professionals to discuss the latest trends in systematic investment strategies.
Key Takeaways
- AI outlook: Experts see a market correction becoming more likely while uncertainty remains over whether AI will be inflationary or disinflationary.
- Macro environment: The U.S. administration is running a hot economy; de‑dollarization stays a focal issue.
- QIS relevance: Systematic investment strategies are an increasingly powerful tool for portfolio managers in these uncertain times.
Macroeconomic trends to watch – AI, data, Fed policy, de-dollarization
The conference tackled a number of broad macro trends, including AI, data, Fed policy and de-dollarization.
As the AI hype cycle continues, a speaker warned there are early signs the market could be unravelling. They said the abundance of circular deals happening at some of the AI giants brought back memories of the vendor financing entanglements that occurred in the lead-up to the dotcom bubble in 2000.
There is also debate about whether AI will be a driver for either inflation or disinflation.
One panellist said the spending required by AI companies on data centre capacity – $12.5 trillion in the case of OpenAI – is likely to trigger inflation.
Longer-term, the situation is less clear-cut. If revenues at AI companies see stratospheric growth, then it follows that inflation could spike, yet if AI causes a massive contraction in the labor market, then disinflation will be a likely consequence.
While portfolio managers told the Quant Forum they do leverage AI tools – such as Large Language Models (LLMs) for certain activities – it is not yet being embedded into investment processes.
The end of day keynote speaker expressed concern that the technology risks stifling people’s cognitive development. They highlighted that while AI is an excellent tool for say, coding, prior knowledge of coding is still a pre-requisite for success.
Data is the fuel that powers AI – and also corporates. It is a potent asset that firms are eager to buy, decode and monetize. But privacy is no a longer a given and personal data is increasingly being sold to willing buyers. However, the first keynote said that players which convert privacy into a value proposition could end up capturing larger wallet share.
Elsewhere, speakers noted the Federal Reserve is running a hot economy, as the administration prioritizes low energy costs, infrastructure, low prices and investment flows. Amidst ongoing debate about de-dollarization – a topic which has become increasingly prevalent following the Ukraine invasion – investors are shifting towards gold and crypto-currencies, with the latter benefiting from the increasingly positive US regulatory framework on digital assets.
Systematic investment strategies: why they matter for 2025 and beyond
Systematic investment strategies are well-positioned to support portfolio managers in today’s choppy and unpredictable markets.
Risks are becoming more ubiquitous and harder to forecast, the audience was told, but investors are acclimatizing, especially following the August 2024 market turmoil and April 2025 crash.
At the most basic level, speakers said the best way to mitigate these headwinds is by running diversified portfolios and adapting their systematic investment strategies – all whilst subjecting them to regular stress testing.
The strategic benefits of QIS were outlined during the Quant Forum. Portfolio managers explained how they are using systematic investment strategies, with one manager describing QIS’s impact on their business as being ‘an operational force multiplier.’
One CIO highlighted that QIS gives them the opportunity to tap into risk premia and sources of returns they would not normally be able to access.
In terms of strategies and exposures within QIS, Japan and European long fixed income volatility are seeing renewed momentum and appetite.
Vincent Berthelemy, Head of Asset Allocation & QIS Strategy, BNP Paribas
There is also interest in FX for combining global carry and G10 fast value strategies. Across equities, a speaker talked about the rollout of a new MSCI Barra, a multi-factor long/short index aimed at deploying Barra’s factor intelligence. Given the recent market shocks, experts also noted there is greater demand for hedging strategies, long volatility, dispersion and zero‑days‑to‑expiration (0DTE) puts.
While some firms may choose to build their own internal QIS capabilities, external QIS solutions are incredibly popular too. Among the benefits of bank QIS solutions cited by speakers, include cost efficiency, simplification, access to expertise, operational infrastructure, the commoditization of hedge fund strategies, enhanced customization, and transparency.
If firms choose to externalize QIS, they will need to collaborate with strong and experienced banking partners, if they are to maximize their potential moving forward.
At BNP Paribas, we are committed to helping clients navigate this landscape through innovation across both equities and fixed income, and with rigorous academic research from our QIS lab.
Nathalie Texier-Guillot, Co-Head of Equity Sales, Americas, BNP Paribas
Ready to adopt systematic investment strategies? Contact your relationship manager to learn more about BNP Paribas’ QIS offer.