Investing is often portrayed as the heroic pursuit of profit, full of excitement and nail-biting risk. This narrative may win advertising awards and shift products, but it does not always serve investors well. In contrast, at Callisto we describe our investment approach as scientific or academic—emphasising the careful, thoughtful processes that underpin the work of the managers that we entrust with our client’s assets.
Academics and researchers around the world painstakingly investigate global stock markets to understand how they behave. Theories are formed and tested using decades of data. The best ideas are published and subjected to intense scrutiny and peer review. This work helps everyone understand how capital markets work. In the real world of investing, the difference between competing approaches is how those ideas are implemented.
Because not all good academic ideas are useful to investors, the challenge is to bring the best ones to life and implement them in a way that adds value to investors, over and above what is already available. In our investment strategies, academic work is combined with practical experience and a thorough understanding of client needs to improve the overall investment experience.
We work with investment managers that have a deep relationship with some of the world’s leading academics in the fields of finance and economics. They are continuously asking questions, challenging their assumptions, probing existing findings, running experiments and using the results to improve their knowledge. These findings are then filtered through to the portfolios that we invest in at Callisto.
This may not sound as exciting as some alternatives, but we think gaining a deeper understanding of where returns come from and finding practical ways to put those ideas to work is a worthwhile pursuit—and it’s one that you can share in as an investor with Callisto.