According to QIC, the institutional investment manager, “big gains” can be made with quantitative investment strategies in Asian emerging markets.
“Emerging markets have been the focus of plenty of attention in the past few years; however, for a host of reasons investing in them has been a hit-and-miss affair,” explained QIC Quantitative Management managing director Michiel Swaak. “But more recently the situation has changed. Better, more consistent accounting standards mean the quality of data coming out of Asian markets has improved dramatically, providing the raw material required to establish meaningful models and identify opportunities that are most likely to deliver consistent alpha for investors.”
QIC first launched its quantitative Asia Pacific Market Neutral Fund in the summer of 2009, which has since proved especially lucrative.
“We firmly believe that quant players have the jump on the market for a number of reasons. In our case, in addition to our extensive research and analysis capability, our team has many years of dedicated Asian experience,” Swaak said. “We’ve used that to develop a systematic trading process, which captures the relevant data as the markets continue to evolve, then feeds it into our flexible portfolio management infrastructure.”
QIC’s report states that the fund applies “comprehensive risk controls to all aspects of the portfolio, including net, gross, country, single-stock, currency, beta and risk factor exposures” in order to reach market neutrality.
“We believe our approach forms the blueprint for successful alpha investing in Asia, and we’re pleased to be able to offer an Australian dollar-denominated investment to Australian clients while we still retain the first-mover advantage,” Swaak said.