Using computer-based models to determine whether or not an investment is attractive should, at least theoretically, mean investment decisions are unswayed by emotion. And there are the added advantages that computers react faster than humans, are generally easier to manage and cannot leave when a better offer comes their way.

The reality of quantitative, or quant, investment does not always match up to that ideal, but Axa Rosenberg is one firm that has successfully harnessed the power of sophisticated mathematical models. Over the past couple of years, it has turned in strong performances, won prestigious new mandates and found time to launch a new strategy for institutional investors that takes short positions. The global equity specialist has won a string of mandates in the UK local authority market. Its approach has worked especially well in small caps, where prices can often veer away from fundamentals and provide good buying opportunities. This April it gained the €15.3bn ($19.4bn) Irish National Pension Reserve Fund as a client. Since its global small-cap composite began in 1999, Axa has outperformed its benchmark on an annualised basis by an impressive 5%, gross of fees. Such performance, together with new mandate wins, has boosted assets under management in the sector by €21bn, or 34%, to €83bn in the past year. Its Europe, excluding UK, small-cap strategy has done nearly as well, averaging returns to investors each year of 4.6% above the index since inception seven years ago. Its European small-cap strategy has outperformed by 5.1% since it began 10 years ago, and it is producing strong returns in the more volatile Asian markets. Axa Rosenberg uses complex mathematical and statistical modelling that analyses data on more than 19,000 companies roughly every three minutes. The firm runs a range of broad market and small-cap single country, regional and global equity products, and uses proprietary software to predict a company's fair value (allowing investors to identify undervalued stocks) and its future earnings. An integral part of its process is a risk model that helps the firm build diversified portfolios. Now the quantitative investment arm of Axa Investment Managers, the French-owned fund management group, Axa Rosenberg was founded 20 years ago by a pioneer in investment risk management, Dr Barr Rosenberg of the University of Berkeley, California. Rosenberg gave his forename to Barra, the risk management systems provider. This year the firm has introduced an emerging market equities fund and ventured into hedging strategies with a product that is 130% long and 30% short positions. "A 130/30 strategy is the perfect bridge between the alternative space and a traditional long-only strategy," said Stephane Prunet, Axa Rosenberg global chief executive.