Data discipline, human judgment: A systematic approach to active returns

Moving beyond market noise

Following a year of exceptionally strong global market gains in 2025, the shifting dynamics of 2026—specifically the return of heightened volatility and a breakdown of predictable trends—have introduced new complexities to investment management. For both advisors and individual investors, navigating this fragmented landscape requires moving past emotional, short-term reactions and finding a path to long-term consistency.

At ATB Investment Management, we partner with experienced active managers to help investors navigate diverse market environments and with the aim of meeting their long-term goals. One such manager is RS Investments, a Victory Capital Management Inc. investment franchise, who applies this exact philosophy across global equity markets. By blending a quantitative systematic investment methodology with experienced qualitative judgment, their unique process helps eliminate human emotional bias to focus on what truly drives long-term shareholder value creation—giving investors a distinct, disciplined edge in today’s complex international markets.

The RS Investments framework

Many investors view quantitative (“quant”) investing as a rigid index tool, or conversely, a mysterious black box. In reality, RS Investments employs a “quantamental” strategy—the marriage of quantitative scale and fundamental depth—offering the benefits of both worlds.

Traditional active managers may provide considerable value through their capacity for deep, specialized fundamental research. By focusing intensely on a selective group of companies, an analyst can uncover nuanced insights and qualitative details that are critical for long-term conviction. A systematic active approach offers a powerful and complementary evolution to this model. Rather than narrowing the focus, it scales the discovery process by applying disciplined, repeatable rules to evaluate a global universe of over 10,000 companies simultaneously. This data-driven framework allows investment teams to identify high-conviction ideas with a level of breadth and objectivity that powerfully complements traditional fundamental analysis.

To execute this in a consistent and repeatable manner, RS Investments filters the market daily through its proprietary QVS multi-factor model: 

• Quality: Identifying fundamentally sound companies that possess a consistent track record of creating shareholder value and stable operating metrics.
• Valuation: Pinpointing companies that are priced reasonably relative to their true intrinsic worth, tracking metrics like cash flow and dividend yields.
• Sentiment: Staying mindful of current market trends and price momentum to optimize execution.

By balancing these three pillars, the investment framework avoids the limitations of a single, rigid lens. As RS Investments notes, a purely quantitative approach can be backward-looking or prone to data errors, while a purely qualitative approach faces human bias and limited scale. To bridge this gap, they combine both methods to build a robust, transparent framework.

Navigating complexity and extracting signal from noise

Every day, we are faced with an overwhelming amount of fast-moving market data. The core challenge for today's investor is not a lack of information, but rather an information overload—separating the meaningful "signal" from the daily market "noise."

When unexpected geopolitical shockwaves or macroeconomic shifts inject sudden uncertainty into the marketplace, it is entirely natural for emotional reactions to take over, which can lead to reactive decisions like panic-selling or chasing short-term trends. A systematic active framework helps serve as a critical emotional circuit breaker. It is engineered to evaluate market data objectively and dynamically, filtering out sentiment swings to isolate true, underlying value. 

At RS Investments, company analysis is only conducted on stocks that have already been selected by their screening models. However, because automated models have baseline limitations, experienced human oversight remains the lynchpin of their process. The team’s models are constructed so that any data issues can be quickly identified. This focus on transparency is of particular concern to investors who worry that quantitative models may be complex “black boxes” of information. Stocks that receive high rankings from the model are subjected to comprehensive qualitative analysis. To ensure absolute data integrity, the RS Investments team applies a strict, two-phase discretionary review process:

• Data technicalities and accounting checks: Analysts actively audit the numbers to strip out one-off corporate adjustments or accounting anomalies that might cause a computer algorithm to trigger a false recommendation. Should a data discrepancy arise, the initial model company recommendation is discarded and the next potential investment candidate is examined. This process is repeated until a company clean of data quality concerns is found.
• Business risk, regime shifts and ESG: Human oversight actively evaluates shifting market structures, macroeconomic trends, and environmental, social, and governance (ESG) factors that historical market data cannot fully capture.

By blending technology with analyst verification, the strategy is designed so that computational models handle the heavy mathematical lifting, while experienced professionals enhance the efficiency and accuracy of the models before capital is ever deployed.

Precision and risk control

One of the greatest benefits of combining a systematic approach with fundamental insights is using multiple inputs to enhance the potential for risk adjusted returns. To navigate challenging market environments, traditional active managers may adapt their strategies toward high-growth sectors, which can occasionally lead to 'style drift' as they broaden their original mandate. 

A quantitative active framework for portfolio construction and risk management helps guard against this. At RS Investments, portfolio construction is managed using tightly defined statistical parameters that maintains explicit, automated limits on sector concentrations, country weights, and active asset positioning relative to a benchmark. 

RS Investments also utilizes a proprietary “RS Class” risk classification framework comprising 26 distinct region and sector groups to monitor and manage these risks. By grouping stocks that share similar behavioural characteristics, the RS Class framework effectively neutralizes unintended allocation noise—freeing the team to direct its analytical energy toward identifying superior individual businesses. The intended result is a portfolio where active risk is deliberately concentrated in stock selection, not inadvertently dispersed across regional or sector tilts.

If a company’s underlying fundamentals or model scores begin to deteriorate, a strict, objective sell discipline triggers the team to validate the reason for this deterioration through model examination and company analysis. If warranted, the position is promptly replaced with a higher-conviction opportunity.

For investors, this translates to a far more consistent and highly predictable investment journey. Rather than trying to time the market or make sweeping macroeconomic bets, the strategy focuses entirely on finding resilient businesses, aiming to minimize uncompensated risks and smooth out drawdowns over full market cycles.

Where “quantamental” fits in your portfolio

Within our Compass Portfolios and ATBIS Pools, we combine multiple, independent investment disciplines to achieve richer diversification. Because the RS Investments approach relies on a data-driven framework combined with qualitative judgement, its results provide an attractive layer of structural protection and balance for a total portfolio.

By partnering with globally respected managers like RS Investments to manage a specific component, we strive to reinforce the resilience of our solutions across changing market cycles.