Acadian unveils ‘highly diversified, risk-reduced’ EM fund

Quant investing specialist Acadian Asset Management has launched a new emerging markets equity fund for Australian investors, leveraging the firm’s expertise in systematic, or ‘quant’, investing.

The Acadian Enhanced Emerging Markets Equity (Class A) fund, built for wholesale investors, seeks out risk-adjusted, long-term returns.

It does this by investing in a “highly diversified” pool of around 500 stocks that contribute small amounts to the total return over time, said Acadian Australia chief executive Gillian Savage, “[generating] incremental returns above the benchmark while reducing active risk.”

According to Savage, emerging markets (EMs) investing – known to experience periods of high volatility – has increasingly lent itself to quant-style investing.

He notes that the EM opportunity set had broadened significantly over the past decade due to the expansion of the investable universe, improved data coverage, and reduced trading costs.

“We are global specialists in systematic investing and our approach benefits investors over the long term by generating a more consistent return profile, which is a highly valuable attribute in an asset class like emerging markets because it can experience periods of high volatility,” she said.

Mark Mukundan, Acadian Australia’s director of wholesale markets said the fund is designed as a core emerging market holding, “due to its high stock diversity, multi-factor approach, and low stock-specific risk profile”.

“It could also be a complementary and differentiating feature if positioned alongside higher risk concentrated strategies or a possible replacement for an index allocation,” he said, noting the fund’s competitive management fee.

The fund attracts a management fee of 0.47%, which Acadian notes is lower than existing MSCI EM Index replication strategies.

Colonial First State (CFS) will serve as responsible entity for the fund.