In blending education with finance, Fabio Dias redefines leadership in quantitative investment management. With a blend of academic rigor and real-world experience, Dias shapes the industry's future while teaching the next generation of financial professionals.
After a 15-year technology and risk management career at Credit Suisse and Lloyds Banking Group, he transitioned boldly into the world of hedge funds. Today, as the lead instructor for financial modeling at the University of Surrey and a managing partner at Stalwart Holdings, Dias is bridging theory and practice in unprecedented ways.
In line with traditional postgraduate education, the financial modeling course at the University of Surrey is set up with theoretical sessions, practical sessions and assessments. However, the implementation of the set up differs from the traditional methods.
Theoretical sessions are kept relevant to students with the use of real time market data and news being presented together with explanatory theoretical notes on a trading-style big screen. Practical sessions teach students how to use market data from public sources, create their own investment targets and implement algorithms to meet these targets, while the assessments take students in front of a Bloomberg terminal to gather market information and use that information to write documentation in Jupyter notebooks explaining the methodology required to manage investment risk.
"My goal is to demystify quantitative investment strategies, which are understandably intimidating for students," Dias explains. "By integrating real-world insights into the classroom and sharing my knowledge with the public, I want to inspire people to build long-lasting and successful careers in this area."
Dias’ Academic Advantage
Dias’ impact extends beyond the lecture hall. According to Dias, “Stalwart Holdings started from a peer-reviewed publication in machine learning applied to finance, written together with Prof. Gareth Peters” (currently an endowed chair professor at University of California, Santa Barbara).
“After the publication was made in 2019, I observed during the COVID-19 crisis in 2020 that markets were behaving in ways that were similar to the description given in the content published one year earlier, when COVID did not even exist. So I decided it was the right time to venture into the world of quantitative investment and set up Stalwart in the second half of 2020.”
His work has been well received since then. He has been invited to speak at several global forums and set the agenda for the smaller investment managers, providing speeches on a number of themes, including quantitative investment models, hedge fund operational structures and technological advances in the field of investment management.
"Fabio is a true leader in his field," says Gustavo Loyola, a leading economist who served as president of the Central Bank of Brazil for two mandates (1992-1993 and 1995-1997). "His insights are invaluable for anyone looking to deal with today's markets, and he also has a very strong ethical ethos which is an extremely valuable feature in business leaders."
Today, Stalwart Holdings has evolved beyond the initial inspiring peer-reviewed publication and has developed three additional quantitative investment strategies to complement the portfolio's risk management. “All strategies have followed the same development process that you would expect for a peer-reviewed publication, and we made the core principles behind them available on our website,” says Dias.
Highlighting the Potential of Investing in Technology
Dias is putting his theories into practice at Stalwart Holdings. The firm's trading strategy is based on cutting-edge quantitative models powered by artificial intelligence. This mirrors Dias' belief in the transformative potential of technology.
"AI is the future of finance. There’s no denying it," Dias asserts. "Taking advantage of the power of data and machine learning will help us make more informed decisions, manage risk more effectively, and ultimately deliver better returns for our investors."
The results speak for themselves. Since its inception, Stalwart Holdings has consistently outperformed benchmark hedge fund indices, a difficult task in the competitive world of hedge funds. Dias' investment of £1 million of his own personal capital in the firm is a powerful signal of his confidence in its approach.
A New Kind of Hedge Fund
“To begin with, we aren’t even a hedge fund in the traditional sense,” explains Dias. “An investment with Stalwart Holdings is structured so that, in the very unlikely event that Stalwart becomes insolvent, I can only recover a penny of my personal capital after our investors have been repaid to the satisfaction of a court of law. So I have a lot to lose if things go wrong, which gives me the right incentive not to take disproportionate risks.”
The high use of technology and the legal structure used by Stalwart Holdings makes it a hybrid between a hedge fund and a vertical fintech. Vertical fintechs are companies that employ their own capital to build technology-based solutions to niche problems in the financial sector, such as alternative investment management in the case of Stalwart Holdings.
Perhaps most remarkable is Dias’ commitment to accessibility and affordability. Stalwart Holdings charges no performance fees in an industry notorious for its high fees and exclusivity, making it a more attractive option for cost-conscious investors.
"We believe everyone should have access to the benefits of quantitative investment strategies," he explains. "By keeping our costs low and focusing on automation, we can deliver those benefits to a wider range of investors."
This philosophy distinguishes Stalwart Holdings and fosters transparency, attracting industry leaders like Gustavo Loyola to its advisory board.
"We're just beginning with AI and quantitative strategies," Dias asserts. "Merging academic research with technology can revolutionize investment management, making it smarter and more effective."
With Dias at the helm, the future of hedge funds may be closer than it seems.
This article was written in cooperation with Anne Schulze