What is an investment strategy?

An investment strategy is a set of rules designed to help investors choose where, how, and when to invest their money to meet specific financial goals. Whether you’re saving for retirement, a house deposit, or growing long-term wealth, having a strategy provides a structured approach to decision-making and risk management.

There are many types of investment strategies, including two broad categories: quantitative and traditional.

Traditional Quantitative Investing

Traditional investing relies on human judgment. This approach involves researching companies, reviewing analyst reports and financial statements to determine whether an investment is worthwhile. This gives a high level of understanding about a company, its management, plans, opportunities and risks.

Fund managers or stock pickers who actively choose investments based on economic trends or company news typically fall into this category.

This method of investing typically cannot be high frequency, is difficult to automate and has high overheads.

Quantitative investing, on the other hand, follows a rules-based approach. Rather than relying on emotions or opinions, it uses data and predefined criteria to drive decisions. This approach is based on systematic research and uses a rules-based quantitative methodology to identify investment opportunities.

Quantitative strategies can run automatically and do not need a big team or lots of manual work.

There is no single “best” way to invest, each approach has its strengths.

Stratiphy follows a quantitative approach to help investors benefit from automation and have the opportunity to create high-performance risk-aligned investment portfolios.

Example: Momentum Investing

Momentum investing is a quantitative investment strategy.

It is built on a simple idea: assets that have performed well recently are likely to continue performing well in the near term. A momentum strategy systematically selects investments based on recent price performance compared to others in the market.

Here’s how it works in practice:

Here’s what the process typically looks like:

• Choose your investment universe – Begin by deciding what pool of assets your strategy will select from. For example, you might choose the FTSE 100, S&P 500, or a mix of global ETFs.
• Set your risk level – Define how much risk you’re comfortable with. This will guide how much the strategy leans into higher-growth assets versus more stable ones, and how it responds to market volatility.
• Add personal preferences – Tailor your strategy to reflect what matters to you. That could mean focusing on specific sectors (like technology or energy), and geographic regions.
• Backtest your strategy – You can simulate how your strategy would have performed over the past 10 years, helping you understand potential returns and how it might behave in different market conditions.
• Automate the process – Once your rules are in place, the strategy automatically selects top-performing assets and rebalances at set intervals to stay aligned with your chosen criteria.

Why it Matters

Having a clear investment strategy can help investors stay aligned with their long-term goals. Whether you're an experienced investor or just getting started, building a rules-based approach like a momentum strategy can bring structure and confidence to your portfolio.

Stratiphy makes it easier than ever to create, test, and automate your own strategy, tailored to your values, goals, and risk preferences.

Create your own investment strategy today with Stratiphy.