Risk providers respond (part 6): What's your competitive advantage?

The final episode of our six-part risk model providers series concludes with a discussion of the competitive advantages of each vendor.  How does each provider believe the company stands out from the pack?

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Some highlights from our episode:

Sebastian Ceria, CEO and Olivier D'Assier, Managing Director for the EU and Asian Markets of Axioma

We are big believers in transparency and this is a big distinguishing factor. We don’t think that factor models have to have factors that have...hundreds or tens of descriptors that are combined with very unique and secret formulas. We believe that clients demand transparency and risk providers should provide that transparency.

Laurence Wormald, Head of Research, Sungard APT

The flexibility of attribution in our risk model is – especially in the equities’ world – a really unique point. You can choose from the widest possible range of explanatory factors, including factors from any other time series FactSet database that you have available when you use the equity model [in] the FactSet platform.

Dan diBartolomeo, President and founder of Northfield Information Services

Unlike some of our competitors, the median tenure of our staff is well over 12 years. In the...first 10 years of this century, our staff turnover is actually negative. So few people left that the number of people who had previously left and rejoined was actually greater.

Oleg Ruban, Senior Associate of Applied Research and Patrick D'Orey, Vice President, Head of Europe Equity Analytics of MSCI Barra

So, if we could have a bottom underlying phrase, if you like, it would be that we offer multiple views of risk. So risk is not a single number. So there are many things that underline this. First of all, it’s all of the different range of models and analytics that suit different types of investment strategies and are complementary between each other.

Jason MacQueen, founder, R-Squared

Well, the particular model that we have up on FactSet...is a short-term model. It is built with the express purpose of being able to forecast risk over a very short horizon, anywhere between tomorrow and two months out, but the one-month would be a good, convenient horizon. We know from our own research and tests and from our users reporting their experiences that it does seem to do a very good job of forecasting short-term risk.