Strategy Provider
A strategy provider creates and offers investment strategies to funds or investors, helping them achieve specific goals and manage risk.
What Is a Strategy Provider?
A strategy provider is a firm or individual that develops and offers investment strategies for use by funds, institutional investors, or traders. These strategies can be based on quantitative models, discretionary decision-making, or a blend of both, and are designed to help clients pursue returns, manage risk, and meet their unique investment objectives.
How Does a Strategy Provider Work?
Strategy providers craft, test, and refine investment approaches. Ranging from global macro and market neutral to sector-specific or algorithmic models. They may license their strategies to fund managers, collaborate on custom mandates, or provide signals directly to trading accounts. The process often involves ongoing performance monitoring, reporting, and regular communication to ensure the strategy remains aligned with client needs and market conditions.
Why Are Strategy Providers Important for Allocators and Fund Managers?
Strategy providers play a crucial role in connecting allocators and fund managers with innovative, alpha-generating approaches. By sourcing and vetting strategies externally, investors can access specialist expertise, diversify exposures, and adapt quickly to changing markets. This model also supports robust risk management by allowing for independent strategy evaluation and operational due diligence.
Example: Strategy Provider in Practice
A family office seeks exposure to systematic trading but lacks in-house expertise. By partnering with a strategy provider specializing in quantitative models, the family office gains access to a proven approach, receives regular performance updates, and can tailor the mandate to its own risk and return preferences. The strategy provider remains responsible for ongoing model refinement and transparent reporting.
When Should You Work with a Strategy Provider?
Engaging a strategy provider is valuable when:
You want to access specialized investment expertise or diversify your portfolio
Your team lacks resources to develop or monitor strategies internally
You’re seeking strategies with a strong track record and robust risk controls
You need to align investments with specific mandates or adapt to evolving market conditions
