Our Products
TPT’s team has developed Machine Learning (ML) investment algorithms for some of the largest and best performing asset managers in the world.
We use this expertise to deliver superior outcomes for our investors and business partners.
THE INVESTMENT STRATEGY FACTORY™
Most investment strategies are false positives, as a result of backtest overfitting. TPT applies its proprietary assembly-line approach to the development of true investment strategies (true positives).
We specialize in alpha capture, statistical arbitrage, trend following, relative value, high frequency, and factor investing. Our algorithms cover all stages of the investment process: data analysis, signal extraction, signal translation, bet sizing, portfolio construction, strategic/tactical asset allocation, risk management, and execution.
In the context of investment mandates, TPT operates as a sub-advisor. Because clients keep the assets, they have full transparency and control over their portfolio, while paying lower fees relative to traditional asset managers.
“Boilerplate products are not designed to beat the market. Obtaining extraordinary outcomes requires unique solutions.”
INSOURCING
Asset management firms spend only a fraction of their resources in research, in many cases less than 10% of their budget. Most of their costs originate from tasks that are redundant to their clients, such as legal, compliance, back office, accounting, reporting, administration, marketing, etc. The implication is that asset managers spend most of the fees charged to clients in duplicated services that clients do not really need, and that add no value.
To stop overpaying, asset owners have two options: First, as discussed earlier, they can outsource the research function to TPT’s investment strategy factory™, while keeping the assets. Second, they can partner with TPT to build internally the research function, so that the entire business process is run in-house. In both cases, clients pay only for the services that add value.
TPT has a vast experience at building investment systems and research protocols for the leading asset managers. Asset owners can benefit from that experience, by working with us towards the internalization of investment mandates that they currently outsource. The advantages are multiple: customization, full transparency, a sharp reduction in management fees, and a significant improvement in performance.
“An investor with a $1 billion mandate could replicate the process of a traditional asset manager at a 90% fee reduction.”
STATISTICAL TESTING
Financial markets are a complex dynamic system. Strategies that perform well today may cease to work in the near future. Investors need to monitor five important probabilities. First, the probability of a false positive. This is the probability that the strategy never existed, and that prior performance was a statistical fluke, which is expected given the sheer number of funds available.
Second, the probability of alpha decay. This is the probability that the strategy existed, but the opportunity has been eroded as a result of overcrowding and competition.
Third, the probability of strategy drift. This is the probability that the manager has, voluntarily or unknowingly, changed the strategy, thus exposing investors to risks and returns different than advertised.
Fourth, the probability of a regime switch. This is the probability that underlying market conditions have changed in a way that is unfavorable for the investment strategy.
Fifth, the probability of scoring. This is the probability of achieving a particular investment goal within a given time horizon. This includes the estimation of the time underwater and maximum drawdown scenarios.
TPT is the recognized authority in investment performance testing. We have invented some of the best known statistical tests for performance evaluation, many of which we have patented.
“Problems can’t be solved by applying the same kind of thinking that was used in creating them.”