Owen Lopez

History teaches us that relying on narrow asset universes for portfolio optimization is a misplaced prudence. The playbook of sovereign funds has long emphasized the need for diversification well beyond 250 securities, even if they come from the S&P 500. A test with such a limited sample does not account for the real complexity of global markets, where sovereign funds manage thousands of assets, exposed to dynamic correlations and currency risks. For example, relying on this type of benchmark in 2008 would have tragically ignored the systemic interdependencies that caused the financial crisis. Technological innovation must primarily prove its robustness against historical reality.

The history of investing shows us that relying solely on a limited 'benchmark' is a precarious method for large-scale portfolio optimization.
Historically, models that failed in real-world conditions often did so after promising laboratory tests, such as the famous quantitative management funds before the 2008 crisis that did not anticipate liquidity shocks.
The old playbook emphasizes rigorous validation of strategies through complete economic cycles and diverse market conditions, including bear markets.
Claiming the viability of quantum optimization based on only 250 assets of an index is insufficient evidence; where are the tests on thousands of assets, exposed to geopolitical risks and various regulatory constraints?

History teaches us that even the most promising laboratory advancements do not guarantee their successful application in complex and unpredictable financial markets.
Historically, new technologies, such as sophisticated financial modeling, have often failed to reproduce their theoretical performance in the face of market realities.
A test bench on 250 S&P 500 assets, although technically impressive, does not capture the myriad of exogenous factors and irrational behaviors that dictate real movements.
The precedent of past crises, where robust models in theory collapsed (for example, during the subprime crisis where risk models underestimated interconnection), urges us to exercise caution before adopting solutions without evidence of long-term robustness.

Where the weak point is seen: Portfolio optimization is not limited to 250 assets of a fixed index.
This test on the S&P 500 is an inherent failure mode, as it ignores the complexity and interdependencies of the global market.
In Switzerland, we manage portfolios with thousands of assets, where correlation shocks and currency risks can cause any model based on simplistic abstraction to fail.
Take Swiss pension funds: their diversification is inherently global, and a test of 250 securities does not at all capture the actual attack surface they are exposed to daily.