TG Optima today announced the launch of Investment Optimizer, a quantitative investment optimization platform. Advanced Trading conducted an e-mail interview with Tony Gau, president, of TG Optima.
Designed to integrate investment and trading strategies for institutional investors, the platform lets portfolio managers and traders "to achieve optimal portfolio construction along with best execution in order to streamline the investment process, broaden risk control, proactively reduce costs and ultimately improve investment performance," according to a press release.
A press representative for TG Optima puts it like this: "Portfolio managers have research management systems and other capabilities while traders have OMS systems and other tools but they don't share the same data and they aren't linked in any real way. The portfolio construction process is comprised of a series of inputs and assumptions that generate investment decisions and the execution process is comprised of a completely separate set of inputs and assumptions that support the implementation decision. As a result, much data gets lost in the middle and traders can't implement a portfolio manager's investment decisions in an optimal and intelligent way. Risk increases, transaction costs escalate and alpha generation is compromised all as a result of this disconnect."
The Advanced Trading e-mail interview with Tony Gau, president, of TG Optima:
AT: Is your solution Investment Optimizer being used inside a buy side firm now?
Tony Gau, President, TG Optima: Our product is currently being beta tested by two customers, one of which is a buy-side firm. They are using the research version of Investment Optimizer that was introduced at the beginning of the year. Hedge funds are a big audience for us. Because of the volume of trading they do and the frequency with which they rebalance their portfolios, cost is a huge issue for them. Our product helps them manage these costs so they can capture Alpha more efficiently, increase their strategy capacity and avoid negative returns.
AT: How is it helping them? What are they using it for?
Gau: Our buy-side customer, a New York-based asset management firm, is using our product to put its strategies into production more quickly and centralize its data. Because our implementation timeframe is only a matter of minutes and our user interface is so easy to navigate the customer can literally develop a strategy, run the optimization, return the results and generate a final portfolio and trade list within minutes, as opposed to file-based portfolio management systems which may take days to reconcile different data sources. Our product stores all of the portfolio managers' and traders' data inputs in a local proprietary database, which means faster decision-making and more security than uploading data files to an external web-based system.
AT: Is your solution customizable? If so, can it help PM's perform what-if scenarios?
Gau: Our solution is customizable and it provides a better way to run what-if scenarios than industry-standard solutions. We have a graphics-based scenario analysis component, which allows portfolio managers to view and compare all of their data on one screen. They can click on specific points to display portfolio strategy details and make instant comparisons of all scenarios.
AT: Does this solution work high frequency trading? Who is your ideal client?
Gau: Our product is an equal opportunity investment optimization tool. It can be used to support both algorithmic and high-frequency trading strategies or smaller scale human trading scenarios. Because our product has the ability to analyze participation rates, optimal trade horizons etc., high frequency traders can take our parameters load them into their trading platforms to execute their trade lists. However, the risk management, costs savings and best execution benefits of our product can be used by a wide range of trading firms. Large buy-side firms who want to foster better communication between their portfolio managers and traders can benefit greatly as can sell side shops who want to provide our product as a tool to their own customers.
AT: What are the biggest concerns of your clients? Gau: Managing data from disparate sources is a huge headache for all potential clients in this space. When you consolidate different feeds, no one vendor is responsible for the overall quality of the data. By constructing our platform on top of a secure, proprietary database, we eliminate the need to work off of multiple data sources and increase security around a customer's trading strategies.
Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio