Founded in August 2015, Catana Capital is a quantitative asset manager based in Frankfurt that offers innovative asset management based on a unique combination of data, experience and modern technology. The company runs a revolutionary new type of strategy which invests according to independent trading signals generated from big data analysis, combined with artificial intelligence algorithms. The company is completely licensed and capitalized according to the German Banking Act. Here the firm’s Founder and CEO, Bastian Lechner, reveals more about Catana’s extraordinary approach to diligent asset management.
Catana Capital is an innovative FinTech company that has already received numerous awards. In 2017 Catana was awarded, inter alia, as best early stage German FinTech company and as best quantitative asset manager in Germany. Since 2013 the Catana’s team has been developing trading strategies that are based on big data and artificial intelligence. Catana is also focused on the automatization of internal processes to accelerate the decision-making process and order execution.
November 8th, Catana has launched the Data Intelligence Fund (DE000A2H9A76) to provide its clients a contemporary investment opportunity that keeps pace with the times by using digital and quantitative methods up to the current state of research. In order to guarantee high investment standards and reach a broad set of potential clients, the fund is packaged as UCITS.
The basis of the investment decision in the Data Intelligence Fund is a unique database containing millions of individual opinions about single stocks and the stock market in general. Every day an algorithm collects more than 2 million securitiesrelated news, articles, research as well as blogs, tweets and forum entries in the world wide web. The algorithm automatically crawls through more than 22 messages per second around the clock. In order to get a broad variety of opinions the algorithm covers content about more than 45,000 securities from seven different countries written in German, English and Chinese. Currently, more than 90% of the data comes from social media.
Catana Capital is an innovative FinTech company that has already received numerous awards. In 2017 Catana was awarded, inter alia, as best early stage German FinTech company and as best quantitative asset manager in Germany.
In two steps the algorithm creates buy and sell signals just by using the continuously updated database. Firstly, all of the collected data is analyzed using Natural Language Processing (NLP). Through the application of NLP, the machine learns to understand the collected content, and constantly improves on this ability day by day. Continuously, NLP is reflecting on the central question of the Data Intelligence Fund investment idea, namely: “Who says what to which security?” The answer to this question is represented by an aggregated sentiment score of each security which builds the basis of generated trading signals.
Secondly, machine learning methods quantify the relevance of the calculated sentiment scores with respect to future stock price movements. As well as the NLP method, the ‘prediction power’ of the used methods is increasing on average over time, since they learn from historical forecast errors. Finally, the algorithm derives trading signals based on the forecasts of the underlying machine learning approaches and adjusts the trading strategy automatically.
The Data Intelligence Fund consists of multiple sub-trading strategies that can be divided into two components: the first component is the stock selection component which is a long only equity strategy that enters long positions in highly liquid European equities according to the outputs of the machine learning methods. The average holding period in the stock selection component is four weeks, while the investment universe consists of stocks that are listed in DAX, MDAX, TecDAX or EuroStoxx50. The second component exposure management, which is a long and short strategy mix entering long and short positions in highly liquid equity indices such as DAX Future. The exposure in this strategy varies from -100% to +100% and the average holding period is one week, while multiple trades per week are possible.
The weighting of each component also varies over time. While the stock selection component accounts for 30-50% of the Data Intelligence Fund strategy, the exposure management component is most of the time a bit weightier as it accounts for 50-70% of the Data Intelligence Funds performance.
In conclusion, the Data Intelligence Fund provides professional investors as well as retail investors the opportunity to invest in an UCITS funds that has hedge funds-like strategies. The underlying data draws a broad picture of the sentiment of individual investors providing useful information about future trends and upcoming risks in the markets.
Accessing a powerful database leads to a competitive advantage compared to traditional investment forms, since traditional investment decisions are based on significantly less information. Furthermore, the investment decisions in the Data Intelligence Fund are only based on the independent buy and sell signals that are generated by the machine learning methods fed with the sentiment scores. As a result, the Data Intelligence Fund is weakly correlated to large indices as well as to large mutual investment funds and is suitable for diversification purposes.
Based on extraordinary back test and out of sample trading results the Data Intelligence Fund targets a significantly higher risk adjusted return than the DAX on a long-term average, without having negative years and keeping volatility below 10%. Catana Capital was recognized as Quantitative Asset Manager of the Year in Germany, and Most Innovative Equity Fund of 2019 (for the Data Intelligence Fund) in Wealth & Finance International’s 2018 Investment Fund Awards.
Address: Frankfurt, 60311, Germany
Telephone: +49 69 2561 7004