From starting as a portfolio manager to founding Trendrating, Rocco Pellegrinelli, Founder and CEO has come a long way. He launched Brainpower in 1996 and established it as one of the top portfolio management systems globally. Later, it was acquired by Bloomberg in 2006. Then, he started a research and development project to design a superior model to capture price trends in listed equities. After a few years of massive testing of 350 indicators and thousands of combinations across 25 years of history for 20,000 securities he got what he wanted. It helped to have the support of a fantastic team of experts, now part of Trendrating, a leading provider of advanced analytics and leading-edge technology for equity investing.
“Many analytical tools make sense, but do they also make money? It is time to bring real value to fund managers.” Keeping this vision in mind, Rocco founded Trendrating with the goal to provide innovative analytics and first-class technology that deliver alpha in a measurable, actionable, repeatable and unquestionable way.
Inspired by his unconventional thought-process, we at CIO Look caught up with him to learn more about his journey.
Below are the highlights of the Interview:
Brief our audience about your journey as a business leader until your current position at Trendrating. What challenges have you had to overcome to reach where you are today?
I started my career as a portfolio manager, and soon, I realized the many pitfalls and traps of being human in a business that requires discipline and objectivity. There-fore, I decided to develop models and a pragmatic methodology capable of providing a sanity check to my investment decisions. After long years of hard work and having seen the benefits of this approach, I decided to leverage my know-how and become an entrepreneur in fintech to serve the asset management industry, which badly needs to evolve and adopt new generation tools.
What are the key challenges for asset and wealth managers in today’s markets?
Performance is the main challenge. According to the SPIVA reports(S&P), a large part of mutual funds underperforms the benchmarks year after year. The results of many asset managers and wealth managers are not different. The stock markets dynamics changed and old-school investment methodologies cannot handle a fast-evolving environment. The price trend of individual securities is influenced by new forces at work. Rapid economic developments, social media influence, investors sentiment evolutions, growing momentum investing contribute to creating and accelerating up and downtrends, and reduce the relevance of fundamentals.
Managing portfolios risks and maximizing performance is difficult without the ability to incorporate analytics specifically designed to discriminate and validate the actual trends, providing a sanity check of assumptions and opinions.
So what is the solution?
Acknowledging and capturing price trends is the essence of successful equity investing.
Intelligent data and new generation tools can help active portfolio managers and advisors to capture trends and reversals, enriching the investment decision framework.
The solution is bringing more advanced intelligence and some well-tested discipline to the investment decision process. Professional investors should rejuvenate the analysis and decision framework, massively run a robust historical test and validate the strategy to be used in actively managing a portfolio.
How can people expect to achieve different, better results if they continue to do things the same way?
What is the mission of Trendrating?
Our mission is to deliver a new paradigm of value to our customers. Asset and wealth managers deserve better content and tools to master a very difficult job and produce the alpha that they are expected to generate.
Our mission is to provide latest-generation analytics and technology whose added value is measurable and repeatable. We stand out from the mass of research, data, and tools whose real value is questionable and often impossible to test and validate. Our “trend discovery” model offers a rating metric to discriminate bull vs. bear trends across stocks with reasonable accuracy (statistics available). Investors can spot new risks and opportunities by monitoring the downgrades and upgrades across 17,000 stocks, 3,600 ETFs, and 330 indices.
Who are your customers?
Our solutions are today part of the investment decision process at 200+ top firms, including asset managers, mutual funds, wealth managers, and RIAs on a global scale. We also have partners like Bloomberg and Euronext promoting our unique methodology to rate price trends.
How do your customers use your solutions?
We have many use cases as our solutions can easily fit into different tasks and approaches, complementing markets and portfolios intelligence. We support ranking and validation of investment ideas, risk control of portfolios, comparative analysis across markets and sectors, tactical allocation, alerts on trend reversals, and the design, test, and optimization of investment strategies.
What is your vision for the industry?
It is an exciting time for those investors that appreciate the evolving market dynamics, have a pragmatic attitude, and are open to reinvigorating their investment strategies, adding the new data and the innovative tools available today. Active portfolio managers have the opportunity to consistently be at the benchmarks by exploiting the substantial performance dispersion that can be observed in any investment universe. Intelligent data is the new gold and a critical edge for smart minds.
What would be your advice to budding entrepreneurs who aspire to venture into the Advanced Analytics sector?
Just a few points. If you want to succeed, make sure you are offering something of real, demonstrable value across different market cycles. Forget the buzzwords, stick to rock-solid, proven concepts and run massive testing before launching. And be prepared to face and deal with the two main enemies of innovation – skepticism for new things and inertia or preservation of the status-quo, the key obstacles to improvements and excellence.