Capturing dynamics of each stock

Oksana Patron

16 November 2022

Ability to capture the dynamics of outperforming stocks and to consistently identify alpha opportunities across different market conditions has seen the Acadian Global Equity Long Short Fund win the 2022 Financial Newswire-SQM Research Fund Manager of the Year’s Global Equities Large Cap award.

“The Acadian Global Equity Long Short Fund’s investment strategy is based on the belief that the characteristics of outperforming stocks are multi-faceted and that this requires a rich mix of factors to capture the underlying dynamics of each stock,” Jean-Christophe de Beaulieu, head of investments Australia at Acadian Asset Management, said.

Acadian Asset Management LLC, who is the investment manager of the fund, says it employs a multitude of unique factors, across areas such as valuation, growth, quality, and price measures to consistently identify alpha opportunities across both a universe of stocks and across different market conditions.

“A long/short implementation is the purest expression of these alphas. Unlike a long only implementation, the ability to short takes advantage of our ability to realise payoffs from negative alpha views on small stocks that have little to no benchmark weight. We believe a robust implementation of both positive and negative alpha views has been key to the fund’s success.”

Speaking on what differentiates the fund from its peers, de Beaulieu stressed Acadian had over 35 years of experience and a dedicated team of 350+ people globally and provided the “deep resources necessary” to remain at the forefront of quantitative investing as well as manage its operational and client service needs.

“Our disciplined and objective investment process is a product of rigorous research set in a collegial environment, which seeks to foster ingenuity through openness, collaboration, and transparency. We value the scientific principles of inquiry, testing, analysis, peer review, and thoughtful execution.”

Additionally, Acadian’s head of investments stressed that data-driven and systematic investment approach not only allowed Acadian to take advantage of inefficiencies and miss-pricings caused by behavioural biases but was also the foundation for making objective trade-offs between risk and return.

“The resulting portfolios leverage our long and short alpha views and are well diversified.”

On top of that, de Beaulieu pointed to its culture of innovation which encouraged debate and the challenging of ideas, both new and established.

That was enhanced with the “open, collegial approach to research” and the emphasis on the diversity of Acadian’s investment team, as the firm said it believed in cognitive diversity as a core competitive advantage and that multiple perspectives lead to better ideas.

“Acadian believes in cognitive diversity as a core competitive advantage and that multiple perspectives lead to better ideas.

“We believe Acadian’s broad investment universe and deep expertise in both data science and investment research sets Acadian apart. This provides the underlying foundation for our systematic process to identify and assess a comprehensive set of nuanced factors and generate alpha views for over 40,000 stocks worldwide from the 200m daily data points we collect.”

Asked about the key components of the fund’s investment philosophy, de Beaulieu said it was a result of a combination of financial assets, which were often mispriced due to the fact that investors were incorrectly processing information, and Acadian’s systematic processes which best capture inefficiencies arising from mispriced fundamental and market information.

“Our edge comes from embracing new ideas and a continuous investment in people, technology, and data.”