Investment strategy

Systematic investing

Transforming how we see the world

Just think about how much data is out there and how it escalates rapidly. In 2022, Amazon.com saw 3.16 billion visits on average per month, while Alibaba generated over US$94 billion in e-commerce sales. And every minute of every day, we have about 97 million WhatsApp messages, and 500 hours of new videos on YouTube. And it goes on.

The funny thing is, we don’t just want data or information. Instead, we want to know what it all means, why it matters to us, and to be able to use the insights we have to predict outcomes

At BlackRock, our systematic investing platform has been doing this for over 35 years with a track record of innovation, creativity and reinvention. Our diverse team of 200+ financial professionals, academics and data scientists, blends the best of humans and machines to unlock new ways to generate differentiated outcomes

They harness cutting-edge technology such as AI and machine learning to review 800-plus data signals, assessing the fundamentals, sentiment, macro, and ESG characteristics of thousands of securities, at scale, and on a daily basis. They can then analyze and combine traditional inputs along with unconventional data sources in faster and more effective ways than any human could ever do.

So, how does this work in the real world?

Since 2007, we have been using natural language processing techniques to capture local text in the form of regulatory filings, news articles, broker reports, social media updates, and other sources to gather timely, nuanced views about a company’s outlook at scale

For example, our model can identify early investment signals by using sentiment analysis, tracking the number of positive and negative words included in a document, and assigning an overall sentiment score based on word counts.

Our approach also constantly evolves. We now apply transformer-based large language models like ChatGPT. These can process long sequences of elements – such as words in a sentence – accounting for the relationship between each individual word with other words, and focusing on the most important points.

And language is not a barrier as we can read text with 7 major languages, which allows us to get local context.

Another source of AI-led alpha might come from the physical world. Here, we can use AI as a tool to compile and analyze location-specific data – such as GPS signals from cell phones, and more to track consumer traffic. Or we can track trucking routes across a country, based on a view that heightened traffic may be a proxy for increased company fundamentals like future sales.

AI and data availability also allow us to better understand corporate intentions and macro dynamics. For example, in the US we tracked millions of online job postings to gauge the health of a company or to target future growth areas based on the skill-sets in demand. The rate of hiring can also be a proxy for activity at the company, industry, or country level.

Yet despite this outlook, machines will not take over. Human input and analysis is a critical component, and fundamental and classic information still have a major role to play. We call this a human-machine-team approach to investing.

Investing evolved

By combining the power of big data, data science, and deep human expertise to modernize the way we invest, systematic investing is unlocking new ways to seek consistent portfolio outcomes in an evolving market landscape.

What is systematic investing?

Systematic Investing, often referred to as quantitative investing, uses data-driven insights, scientific testing of investment ideas, and advanced computer modelling to build portfolios designed around specific investment objectives.

Simply put, we turn research and data into alpha opportunities.

Key points

01

Seek consistent alpha

With systematic investing, we aim to generate consistent, durable, and repeatable alpha, which even in small amounts, can help a portfolio deliver outsized returns over time.
02

Engineered for scale

Our systematic strategies use advanced machine learning techniques to process large volumes of traditional and alternative data. The scale of our research has enabled us to develop a library of over 1,000 investment signals which power our return forecasts and portfolio decisions.
03

Four decades of innovation

Built on over 40 years of experience, BlackRock’s Systematic team combines advanced technology with human expertise. Our PhDs, investment professionals, researchers and data scientists work together to blend data-driven insights with the art of investing.

The systematic investment process

There is no guarantee that research capabilities will contribute to a positive investment outcome.

Systematic Investment Process Video Script

Systematic investment process

The world is more data-driven than ever before. Our systematic process leverages vast sets of data, both traditional and alternative, to provide investment insights faster, at greater scale and with more granularity. We score and rank thousands of securities daily to help make investment decisions in real time, based on company fundamentals, market sentiment and macroeconomic themes.

Our fundamental signals perform the same analysis a traditional security analyst might. Our models leverage data and technology to systematically evaluate thousands of securities. Using alternative data, such as internet search, transaction activity, and geolocation data, we score the attractiveness of investment opportunities against more traditional accounting measures.

Our sentiment signals recognize factors other than fundamental strength can influence returns over shorter time frames. Sentiment signals analyze a broad range of market views from sell side ¹analysts, company management, and other investors. Electronic text forms a large part of the underlying data that drives these insights and seeks to enable our models to identify where analysts and management are more positive (or negative) on a company’s outlook.
Our macroeconomic signals seek to form a view across groups of securities rather than individual companies. For example, we analyze the impact of positive hiring trends or adverse inflationary pressures across a universe of securities. We evaluate the impact of macroeconomic data among countries, industries, and equity styles, such as value and growth.

The final score for every security is a weighted combination of all signals, blending the views across these insights.

The final “alpha” score represents our assessment of the return potential of each security relative to all the others within the investible universe.

Portfolio Construction

Our investment process² seeks to systematically capture the drivers of future returns, to create a portfolio that seeks to maximizes exposure to our signal views. We construct portfolios starting with these final alpha scores and size positions aligned with these scores. A market neutral portfolio would hold a long position³ in securities with a positive score, and a short position⁴ in securities with a negative score.

However, this doesn’t tell us anything about risk and implementation frictions such as transaction costs and constraints. To account for this, we take into consideration the expected return of a position, alongside an assessment of its potential risk using a multi-factor risk model.

Whether the portfolio being generated is a market neutral hedge fund designed to deliver an uncorrelated source of alpha, or a long only portfolio seeking to outperform a broad index of market exposure, the process is identical. The final output is intended to capture the broadest possible opportunity set within the target market, as we seek to achieve the best possible tradeoff between risk and return net of transaction costs.

[DISCLAIMERS]

There is no guarantee that a positive investment outcome will be achieved.

While the investment approach described herein seeks to manage risk, risk cannot be eliminated.

Risk Warnings

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time and depend on personal individual circumstances.

The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective.

This material is prepared by BlackRock and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date shown above and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. This material is intended for information purposes only and does not constitute investment advice or an offer or solicitation to purchase or sell in any securities, BlackRock funds or any investment strategy nor shall any securities be offered or sold to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Investment involves risks. Past performance is not an indication for the future performance.

In Singapore, this is issued by BlackRock (Singapore) Limited (Co. registration no. 200010143N). This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

Prepared by BlackRock Investments, LLC. Member FINRA.

¹ Sell side: refers to a portion of the financial industry that issues, sells, or trades securities in the public market.

² Source: BlackRock, 2024. Investment process is subject to change and is provided here for illustrative purposes

³ Long position: A long position refers to the purchase of an asset with the expectation that its value will increase over time.

⁴ Short position: A short position refers to borrowing a security, selling it, then buying it back later at a lower price to return to the broker and keep the difference.

By analyzing thousands of datapoints daily— including fundamentals, sentiment and macroeconomic signals — our systematic approach aims to make more informed, timely investment decisions while carefully managing risk.

One strategy, many applications

Systematic investing may serve various roles for your portfolio, including :

Core allocation with potential to outperform

Portfolio building blocks designed to deliver better results than the broader market over time.

Income and growth

Seems to provide consistent high income while benefiting from market gains, without taking on more risk than the overall market.

Portfolio diversifier with return potential

Alternative strategies can help spread risk by adding investments that don’t always move in step with traditional markets, while still aiming to deliver attractive returns.

Why BlackRock Systematic?

For decades, BlackRock’s Systematic team has been at the forefront of data-driven investing — transforming research and technology into alpha opportunities. Powered by scale, diverse talent, and relentless innovation, we’re reimagining what’s possible in modern investing.

$394

Billion AUM across equities, fixed income, and alternatives

40

Year track record of systematic investing

220

Team of portfolio managers, researchers and technologists

BlackRock Systematic, as of 31 Dec 2025. For illustrative purposes only. Currency in USD.