Rocco Pellegrinelli, CEO
In fund management, the nemesis of an active managers’ excellence is skepticism and inertia. Both lead to the persistent under performance of most fund managers. Most fund managers still rely excessively on old methodologies and are held hostage to the disposition effect, which negatively impacts investment performance. In order to enhance investment analysis and fundamental research, fund managers need an advanced, data-driven analytics platform. “Our mission is to help fund managers fight back and prove to clients they can outperform passive management strategies,” begins Rocco Pellegrinelli, CEO of Trendrating. A Swiss-based firm, Trendrating is at the forefront of offering analytics solutions that replace archaic investment practices allowing investment firms to invest in innovation that generates better performance.
To accomplish their mission, Trendrating provides advanced analytics designed to capture trends, identifying stocks with a high probability to be winners, and avoiding securities that may result in losses within a yearly horizon. Trendrating covers over 20,000 stocks, ETFs, sectors, and indices using a pattern recognition algorithm that after being massively tested on over 25 years of data, has been live, documented, and used by 100+ customers since 2014. This unique “trend capture” model, generates actionable ratings grades (A, B, C, and D) where A and B indicate a bull trend while C and D show bear moves.
Our mission is to help fund managers fight back and prove to clients that they can outperform passive management strategies
The algorithm works on a multi-factor analysis and uses a self-adaptive, flexible time window. When the different factors are in sync, there is a high probability that a relevant trend is in place. The dynamic time window enables a more timely identification of an emerging trend and the multi-factor approach filters out price noise, short term volatility and false moves. Before engaging, the firm allows customers to track and validate its data. “For instance, a portfolio rated A- to B+ is a great portfolio, as most of the holdings are bullish, but if the rating is C, it’s overexposed to stocks in a bear trend raising the risk profile. We introduced this new metric to assess the quality of a portfolio and support an effective reality check.” explains Pellegrinelli.
To monitor the performance of their clients’ portfolios, Trendrating offers a Performance Management Platform that is integrated with an array of functionalities—market screening, investment opportunity identification, portfolio risk monitoring, tactical allocation, ranking any investment universe, and individual security analysis.
Trendrating has also launched a new product, a Systematic Management Engine that allows clients to design, backtest, and optimize investment strategies, and systematically manage portfolios.
Pellegrinelli cites a success story where a client employed Trendrating to monitor their portfolios and identify underperforming ones, switched out of D rated stocks to A rated stocks and improved performance by seven percent. “With our help, the CIO was able to question the portfolio managers’ performance across the organization using a disciplined approach to improve overall returns,” mentions Pellegrinelli. Similarly, in another instance, a registered investment advisor launched a mutual fund in late 2018 using Trendrating, that is currently ahead of the S&P 500 by 10 percent since inception (Symbol: IPTRX).
With a vision to assist clients in the best possible way to maximize investment performance and minimize risks, Trendrating is focusing on continuous innovation using the latest technologies. The company releases new functionalities every quarter based on customer feedback. Trendrating is also partnering with leading data providers, exchanges, and brokers to offer the company’s data and technology. Trendrating services premier clients across Europe, North America and Asia. Trendrating intends to make its trend capture methodology a standard for portfolio analysis.