Trendrating, a provider of momentum factor analytics for global investment managers, has added Strategy Builder as a new module within the Trendrating Momentum Analytics Platform (TMAP).

According to Rocco Pellegrinelli, CEO of Trendrating, many large fund managers are embarking on a new paradigm by switching from a traditional asset allocation approach towards factor-based allocations.

“Recent studies have shown that factor premiums, like low-volatility, value and momentum, outperform market-capitalization weighted indices and possess a much better risk/return profile compared to the market index. Our Strategy Builder makes it easy to overlay momentum with other factors to enhance returns and mitigate risk,” he said.

Pellegrinelli said the Strategy Builder is based on a momentum model and it is “very quick to react to trend changes”.

“It is a fantastic tool that makes possible to simulate the strategy based on the momentum. I think that five years from now, 50% of the asset managers worldwide will use some momentum metrics one way or another,” he told Africa Global Funds.

Trendrating filters out price swings and false moves and captures the true underlying trends, keeping the noise out and analyzing the real medium term direction of price.

The model identifies momentum one to three months ahead of established legacy models and thus participates in price trends for a longer duration.

Pellegrinelli said that by using Strategy Builder asset managers can add some more discipline and transparency to their decision making, and counterbalance all the noise in the market.

“The result is better performance and better risk control. So it is about making more money on the upside and managing more effectively bear phases of the market,” he explained.

Strategy Builder enables users to create and personalize fully actionable momentum strategies that overlay against existing portfolio strategies without involving expensive quantitative research analysts or programmers and features real-time alerts and integration with the portfolio management system.

Trendrating covers developed, emerging and frontier markets worldwide including Africa.

The firm’s clients include mutual funds (active funds), passive funds, and independent asset managers.

The Trendrating Momentum Analytics Platform provides portfolio managers and market strategists with web-based tools to measure momentum.

Ratings can be exported into Excel, research reports and quantitative models.

Modules included in the current version include the Screener, Portfolio Analyzer, Portfolio Optimizer, Back Tester, Strategy Builder and Index Builder.

In terms of product development, Pellegrinelli said: “We will be adding more data to our history. We will also add some additional tools to analyze portfolios.”

Pellegrinelli added that they are planning to build their exposure in the African region: “We think it is a very exciting area and a high yield area. We will be dedicating more efforts to expand our presence and coverage in Africa.”