< Return to All Blogs

Workflow: The #1 Reason Funds Say “No” To Alpha Theory

John Ryan discusses the tools Alpha Theory built to make it easy for fundamental fund managers to incorporate their research and data into Alpha Theory. Excel Connect enables managers to pull data into the platform and push it out so teams utilize updated research to make better investment decisions.

This article was written by John Ryan, Client Experience Manager at Alpha Theory.

Great in Theory

We talk to fundamental investment professionals all the time, and it is rare for us to find someone who disagrees with the idea behind Alpha Theory. Of course, it makes sense for a firm to centralize its data in one location, define the important variables that impact position sizing decisions, and build a rules engine to generate intuitive and insightful position size recommendations. Whether funds religiously follow the recommended position sizes or use them as a signal generator to focus their attention and inform decisions, pretty much everyone agrees that it is a good and effective method for portfolio construction and continuous improvement.

However, there is a catch – people may want to leverage the platform's capabilities and realize the benefits, but the lift required to put their research in one place can seem like a huge hurdle to overcome. We frequently hear conversations like:

“Yeah, it would be great to have that system, centralize our research, and update frequently, but we are already doing a million things. We simply do not have the time to take our work and put it into another place!”

It’s a fair point. Everything is a balance of costs and benefits, and it is reasonable to question whether the costs of time and focus for what are often already lean teams are worth the benefits on the other end. We at Alpha Theory believe the answer to be a resounding yes. But we are not the ones tracking hundreds of companies, building models, joining endless earnings calls, and doing countless other daily tasks that inevitably fill up your days.  

This is why we built a solution—Alpha Central—to connect disparate Excel models and other data sources into a central repository and pair it with a team of investment process professionals to eliminate the “no because of workflow.”

Putting Theory into Practice

Excel Connect, Alpha Theory’s Excel plug-in, gives users access to a suite of simple Excel functions that allow them to push data to and pull data from the platform. Set the template up once, and you can make updates with a push of a button:

  • Price targets and probabilities
  • Estimates and multiples
  • Fund rules and constraints
  • Custom fields specific to a user’s environment
  • Tags to organize and manage various portfolio subgroups

Pulling data into Excel is just as easy. The tool is easy to set up, and you can either do it yourself or have Alpha Theory’s investment process professionals train users on how to build and maintain the connections or build the connection directly into their team’s environment.

We believe in the Alpha Theory method of portfolio management and are committed to helping our clients realize that vision without increasing their workloads. That is why over 60% of Alpha Theory clients currently upload and maintain their data using Excel Connect. This allows for more frequently updated research that can feed the Alpha Engine, which leads to better position sizes and, most importantly, better returns.

Portfolio Optimization
Portfolio Strategy