Why to eye quant funds: Meme Capital Management
[[{"fid":"28625","view_mode":"default","fields":{"format":"default"},"type":"media","attributes":{"alt":"Why to invest in quantitative funds: Meme Capital","class":"media-element file-default"}}]]
Investors might be missing out on attractive returns and opportunities, which a lot of brokers are unaware of, unless investors have some exposure to quantitative style funds, according to Meme Capital Management.
Meme Capital's chief investment officer, Greg Jude, employed quantitative analysis to pick ex-ASX top 20 stocks that were going up and outperforming.
He held about 90 stocks, some of which did not have any broker research, simply because he picked stocks based on upward movements.
"We can measure those things quantitatively, as we have numbers that we assign to those things, where we compare stocks, one stock to another, a stock to an index, a stock to its peers. And therefore we automatically gravitate to those stocks that are simply doing best in the market," he said.
He said he developed a systematic set of rules in pyramiding stock selection, based on both risk and return.
"The system identifies when we need to pay attention to stocks, or when we need to pay attention at all. For instance, the stocks that are going down and underperforming simply don't enter the universe for us."
As a result of the portfolio construction process, the Meme Australian Share fund made its way into the top 20 performing managed funds in Australia. Year-on-year it returned over 33 per cent, according to the Money Management Investment Centre (MMIC). Meanwhile, over the last three years, it produced over 22 per cent per annum.
Jude said the portfolio just followed the rules and parameters he set and the results just essentially spoke for themselves.
"It's unashamedly bottom-up. It's not thematic at all. So we didn't decide a year ago that gold was going to do what it's done, we just automatically, by virtue of the strategy, take positions in the stocks that are presenting opportunity to us.
"We might find in hindsight that we were holding a lot of material stocks, which we are at the moment. Not the big end of town, not the BHPs and Rios, the smaller stocks that are performing well," Jude said.
Recommended for you
Lonsec and SQM Research have highlighted manager selection as a crucial risk for financial advisers when it comes to private market investments, particularly due to the clear performance dispersion.
Macquarie Asset Management has indicated its desire to commit the fast-growing wealth business in Australia by divesting part of its public investment business to Japanese investment bank Nomura.
Australia’s “sophisticated” financial services industry is a magnet for offshore fund managers, according to a global firm.
The latest Morningstar asset manager survey believes ETF providers are likely to retain the market share they have gained from active managers.
