Gillian Savage

Global systematic investment manager, Acadian Asset Management LLC has launched an emerging markets equity fund for Australian wholesale investors, giving financial advisers and their clients access to a diversified portfolio of emerging market companies via Acadian’s disciplined, systematic investment process.

The Acadian Enhanced Emerging Markets Equity – Class A Fund (with CFS as Responsible Entity) seeks to maximise risk-adjusted, long-term returns by investing in a highly diversified portfolio of approximately 500 stocks.

Gillian Savage, Chief Executive Officer, Acadian Australia, said the emerging market opportunity set had broadened significantly over the past decade, due to the expansion of the investable universe, improved data coverage, and reduced trading costs. These developments favoured the group’s systematic style of investing, which relied on quantitative models and algorithms to make investment decisions.

“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.

“With a large number of stocks contributing small amounts to the total return over time, the strategy is designed to generate incremental returns above the benchmark while reducing active risk.”

Acadian has applied its systematic, active investment process to emerging markets since 1994.

Based on data from eVestment, the median systematic manager in the eVestment Global Emerging Markets All Cap Core Equity universe outperformed their fundamental peers over 1, 5, 10 and 20-year periods (after fees and based composite performance of peer groups).

Mark Mukundan, Director of Wholesale Markets, Acadian Australia, said the emerging market universe presented a distinctive opportunity set for wholesale investors to access a large pool of companies with returns closely linked to local influences.

“This fund has been designed to be a core emerging market holding, due to its high stock diversity, multi-factor approach, and low stock-specific risk profile,” he said.

“It could also be a complementary and differentiating feature if positioned alongside higher-risk concentrated strategies or a possible replacement for an index allocation, given the fund is actively managed and competitively priced at a management cost of 0.47% which is lower than existing MSCI EM Index replication strategies.”

Acadian had A$189bn in assets under management including $39bn in emerging market strategies, as at 31 December 2024.

The group manages a range of active equity strategies, including global, Australian, and emerging markets, on behalf of some of Australia’s largest superannuation and pension funds and corporations.

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Matt Picone

Investors should pay closer attention to management quality and corporate governance in 2025 to ensure they are not caught off guard by the misbehavior of CEOs and senior executives, which have the potential to curb investment returns, according to research by global systematic investment manager, Acadian Asset Management.

Secret affairs, sexual harassment and systemic abuses of power were some of the scandals that engulfed Australian companies in 2024.

Events like these may impact company valuations, demonstrating the importance of having the right checks and balances in place to ensure that management behave in a way that is aligned to shareholders’ interests, said Matt Picone, Portfolio Manager at Acadian Australia.

“When making investment decisions, it’s important to consider corporate behaviour and culture. These measures go deeper than the glossy statements and usual governance metrics quoted in annual reports,” he said.

Based on research by Acadian, companies with poorer corporate behaviour and culture have consistently under-performed their peers both in Australia and globally.

Acadian observed this trend in the group’s management behaviour factor signals in 2024.

“This underperformance wasn’t necessarily because of public scandals, and it is difficult to predict such events, however, there can be red flags that may point to corporate executives not acting in shareholders’ interests and this may lead to negative behaviour,” Picone said.

“Not only did companies that scored poorly at the start of the year become more involved in negative events that played out in the media, but they also significantly under-performed from a share price perspective.”

In the past year, an array of management indiscretions impacted Australian listed companies including misuse of company resources for personal interest, bullying and harassment, failed whistleblowing procedures, undisclosed investments, and systemic breaches of professional conduct.

Regardless of the truth behind incidents, Picone noted that such events and speculation had potential financial consequences including loss of momentum, project delays, earnings and revenue downgrades, share price volatility, and weak investor sentiment. LEVEL 9, SUITE 3, 20 MARTIN PLACE, SYDNEY NSW 2000 //// ACADIAN-ASSET.COM Acadian Asset Management (Australia) Limited – ABN 41 114 200 127 – AFSL No. 291872

In many cases, they attracted regulatory attention and director resignations.

While corporate Australia exhibited strong governance practices, with the average governance rating of Australian companies currently higher than the company average in other major regional and global market indexes, based on MSCI Governance Pillar Scores, Picone said investors should not be lulled into a false sense of security.

“Australian investors could be forgiven for thinking that they don’t need to worry too much about the quality of management, however, the behaviour of CEOs and senior executives both in the office and outside, although more challenging to observe, is a critical component in measuring a company’s overall management quality,” he said.

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Gillian Savage

Global systematic investment specialist, Acadian Asset Management LLC, has added to its systematic credit lineup with the launch of new Global High Yield and U.S. Investment Grade offerings.

Managed by the firm’s US-based credit team, led by Scott Richardson, Senior Vice President and Director of Systematic Credit, the strategies join U.S. High Yield – launched in November 2023. Richardson joined Acadian in 2022, after over 15 years leading both systematic equity and credit investing at BlackRock and AQR. He has over 25 years’ experience in academia at various institutions including the London Business School and University of Pennsylvania’s Wharton School.

In emphasising the case for a strategic allocation to credit, Richardson said: “research shows that investors are well-served to have an allocation to government bonds, corporate bonds, and equities, rather than focusing on one asset class or a duo of asset classes”.

Both Global High Yield and U.S. Investment Grade aim to deliver robust, diversifying active returns based on fundamental and technical investment ideas.

Richardson also pointed to transparency and implementation efficiency as key benefits of Acadian’s offerings: “Systematic approaches can more easily provide transparency on portfolio composition and performance as well as capitalise on the fragmented corporate bond trading environment. At Acadian, we view both as high priorities that are worthy of significant resourcing.”

“On the trading side, we find the largest implementation benefits come from the ability to process vast amounts of trading data and react in real-time to short-term market opportunities,” he said.

Gillian Savage, Chief Executive Officer, Acadian Australia, said that amid higher rates, demand for credit strategies was strong and growing, particularly among institutional investors.

“Acadian has a long and successful track record of managing systematic equities strategies, and the team’s philosophy of taking a structured, data-driven approach to credit is a natural fit for our investment platform,” she said.

In terms of a broader spectrum of credit capabilities beyond the three strategies now live, Acadian can offer benchmark-aware investment solutions across the developed market corporate bond universe, covering over 20,000 securities. Investment vehicles can be tailored to meet asset owner preferences with respect to geography, ratings, and sustainability criteria.

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Jean Christophe de Beaulieu

Global systematic investment specialist, Acadian Asset Management LLC, has warned investors about the dangers of latching onto popular investment slogans, and urged financial advisers to speak to clients about the risks inherent in chasing broad macro themes.

The group’s latest paper: Rising Tiger, Falling Dragon: Theme Du Jour in emerging markets equity investing, addresses the latest catchcry depicting the recent surge in Indian stocks and the disappointing performance of Chinese equities.

According to Ram Thirukkonda, Acadian Senior Investment Strategist, and co-author of the paper along with Portfolio Manager Chris Covington, catchy slogans can be cute and fun but they are also superficial and reflective of past price trends, leaving investors who follow them exposed to sudden reversals of sentiment.

The Rising Tiger, Falling Dragon theme currently trending is a satirical take on the Chinese movie, Crouching Tiger, Hidden Dragon.

“Macro thematic investing in emerging markets is risky and restrictive, and themes that start off captivating the market usually end up frustrating investors,” Thirukkonda said, citing examples including BRICS (Brazil, Russia, India, China and South Africa), BATTS (Baidu, Alibaba, Taiwan Semiconductor and Samsung) and the Fragile Five (Brazil, India, Indonesia, South Africa and Turkey).

“These past themes highlight the shortcomings of a simplistic view. For example, from 2017-2020, the emerging market tech stocks known as BATTS climbed 30% per annum, but when the BATTS-centric growth theme ended in late 2020, investors lost close to a quarter of their three-year gains in about forty days. Those who remained invested for another year, ended up forfeiting the bulk of their gains.”

Instead, investors should stay broadly invested and embrace active strategies that cast a wide net over the full investment universe and identify opportunities based on much richer information than just the macro picture, the Acadian paper states.

In Australia, Acadian offers a number of global equity strategies, which can be invested in emerging markets on an opportunistic basis.

According to Jean Christophe de Beaulieu, Head of Investments at Acadian Asset Management (Australia) Limited, investing based on fundamental, bottom-up stock analysis is more rewarding for investors than relying on top-down calls.

“One of the most dangerous things about following macro themes is that there is usually some truth to them. In the case of Rising Tiger, Falling Dragon, Indian stocks have rallied while Chinese equities have struggled for several years,” de Beaulieu said.

“At a superficial level, India and China appear to be polar extremes from an economic perspective, however, divergent macro trajectories don’t necessarily imply a promising investment opportunity. Furthermore, economic optimism about India and pessimism about China are broadly reflected in market valuations.”

“As investment professionals, we don’t place weight on slogans but we can’t assume others don’t. For advisers looking to actively engage with clients, particularly younger people, investment slogans and memes provide an easy talking point and an opportunity to demonstrate their expertise by warning of the potential dangers of following macro themes.”

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Former Director of Portfolio Solutions at Betashares, Issak Walkom, and former Investment and Research Analyst at Allen Partners, Oscar Eele, have both joined Acadian.

Walkom joins in the position of Vice President, Wholesale Business Development and Eele as a Business Development Associate.

Walkom and Eele report to Mark Mukundan, Senior Vice President, Wholesale Markets.

Mukundan said adviser demand for Acadian’s investment capabilities had been steadily growing since 2020, when the group reinforced its commitment to the Australian market by bringing wholesale distribution in-house. Prior to that, Acadian had a long and successful affiliation with Colonial First State.

“Acadian is well known in the institutional market as a leader in systematic investing but we are less well known in the intermediary market. An important focus for the business has been to grow and strengthen our relationships in the IFA and intermediary consultant space and momentum is building, particularly for systematic long/short equities strategies,” he said.

“We are investing in our distribution team to capitalise on these opportunities, and we are excited to have Issak and Oscar join us at this important time.”

Gillian Savage, Chief Executive Officer, Acadian Australia, said the group had plans to launch a number of new strategies into the Australian market in 2024 including systematic credit.

“We will continue to grow our institutional and wholesale footprint in Australia by investing in our people and team, and leveraging our global resources and capabilities to deliver innovative client solutions,” she said.

Globally, Acadian manages more than $150 billion including $9.5 billion on behalf of Australian and New Zealand investors.

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The Australian market has roughly a 20% probability of achieving a net zero target by 2050. This is based on Acadian’s systematic analysis of the ASX 300, which leveraged technology including Artificial Intelligence and Large Language Models (LLMs) to gather and interrogate volumes of company data and information at speed.

The group’s research has implications for sustainable investors and the financial advisers, superannuation funds and asset owners charged with constructing and managing climate-aware portfolios on behalf of members and clients, said Matt Picone, Senior Vice President and Portfolio Management, Acadian Asset Management Australia.

“Many companies are heading into difficult territory because they have tackled the low-hanging fruit, such driving operational efficiencies, using existing renewable energy sources and adopting EV fleet solutions, to get them to a certain point and now they need to work much harder to get the rest of the way,” he said.

“This will require investing in technology and exploring more theoretical options to develop their decarbonisation strategies. With so much uncertainty, we can’t say for sure a company will or won’t hit their targets but our model examines corporate communications and information, including historical data, track record of strategy execution and forward-looking statements, to produce a range of likely outcomes for each company and then aggregates that for a market view.”

“The probability of the Australian market achieving its targets is worryingly low.”

Mr Picone said changing investor expectations and growing demand for sustainable investments made it critical that portfolios were accurately positioned to meet any climate-related objectives.

Acadian’s analysis follows the recent launch of the group’s Net Zero Credibility Assessment model, which is available for use by its institutional investors to help assess the likelihood of companies and markets achieving their sustainability targets. It is the first of its kind to integrate Large Language Models, the same technology that underpins ChatGPT.

According to Gillian Savage, Chief Executive Officer, Acadian Asset Management Australia, the group’s processes, systems and technology positioned it strongly to build and manage sustainable portfolios and generate alpha for its wholesale and institutional clients.

“We’re able to gather, monitor and digest company information, including annual reports, investor presentations and analyst research reports in a fraction of the time it takes traditional fundamental managers,” she said.

“Companies in the MSCI World Index release about 2,500 sustainability reports per annum and each report would take an analyst an average of 80 minutes to read but we’re doing it in about 15 seconds.”

Matthew Picone added: “Utilising LLMs, Acadian can assess information and, importantly, linguistic cues to determine, for example, if companies are being specific or vague about their decarbonisation plans. We can track changes in what companies are saying over time. Our process applies a higher score to companies that are consistent and use quantitative language, as opposed to unsubstantiated motherhood statements.”

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And hired Scott Richardson as Director, Systematic Credit to lead this effort. 

Mr Richardson will build out and lead a team of portfolio managers, researchers, traders, and support personnel focused on this new initiative, with plans to seed the first strategies in 2023. 

This work will initially focus on corporate credit-based strategies including high yield corporate, investment grade corporate, and credit long-short. 

Acadian Chief Investment Officer, Brendan Bradley, said: “We believe these fixed income strategies most closely resemble the equity strategies we manage today and will benefit from our existing expertise in data analysis, signal construction, and trading.” 

He added: “Scott has had a stellar professional and academic career focused on systematic investing. We have long been familiar with his published research, and we are thrilled to have him on the team contributing directly to our work.” 

Mr Richardson has over 15 years of experience in leading both systematic equity and credit investing at BGI/BlackRock and AQR. He has over 25 years of experience in academia at various top-tier institutions, most recently at the London Business School. 

Acadian cited changing bond market dynamics (including increases in electronic bond trading and data availability), alignment with their core capabilities, and investor demand as the primary drivers behind their strategy to enter systematic credit. 

Chief Executive Officer, Ross Dowd, said: “We believe incremental investment in our research and resources towards credit will provide differentiated fixed income strategies for our clients.

“We continue to see investor demand for systematic strategies offering consistent returns paired with clarity around return drivers.” 

Mr Richardson previously worked as a researcher and portfolio manager at AQR, with a focus on credit and fixed income markets, and has held senior positions at BlackRock (Barclays Global Investors), including head of Europe Equity Research and Head of Global Credit Research. He is also a Professor at London Business School, where he teaches M.B.A. and Ph.D. classes. Scott began his career as an Assistant Professor at the University of Pennsylvania. He is an editor of the Review of Accounting Studies and has published extensively in leading academic and practitioner journals. In 2009, he won the Notable Contribution to Accounting award for his work on earnings quality and accruals.

Scott earned a B.Ec. with first-class honors from the University of Sydney and a Ph.D. in Business Administration from the University of Michigan.

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Greenwashing occurs when organisations make unsubstantiated claims about their ethical and/or environmental practices.

Acadian, a leader in global systematic investing with A$156 billion in assets under management as of June 30, 2021, harnesses artificial intelligence to better screen public companies’ green credentials.

Andy Moniz, Acadian’s director of responsible investing who is based in their UK affiliate, said: “Quants are ideally suited to identifying greenwashing because they are data-driven. This new system enables us to analyse significant amounts of both structured and unstructured data.”

Acadian uses ESG signals drawn from text mining of sustainability reports, regulatory filings, shareholder proposals and other company data. Signals range from the identification of physical and transition climate risks, discussions of employee well-being and corporate culture during the COVID-19 pandemic, to human rights and supply chain concerns.

Acadian’s system cross-checks what companies say in their annual shareholder meetings, filings and earnings calls, versus their actions, as tracked through corporate policies and sustainability reports.

“We’re merging these datasets together to identify companies that talk a lot about sustainability but perhaps don’t actually do much,” said Dr Moniz. “The premise being that a company’s actions speak louder than its words.”

“In the case of earnings calls, we identify evasive and potentially deceptive talk,” he said. “Our text mining algorithms assess to what extent managers are directly answering sell-side analysts’ sustainability questions or giving a boilerplate response or an indirect answer.”

He said the greenwashing model rewarded answers that included quantitative metrics and targets, forward-looking views or that focused on opportunities. It penalised vague or backward-looking statements and those that emphasised risks.

For example, Dr Moniz noted how Acadian tracked whether companies that expressed concern for their employees’ wellbeing during the COVID-19 pandemic was consistent with their behaviour.  “We correlate what companies are saying versus information from online reviews and Web data to gauge corporate culture,” he said. Acadian then engages with firms that it suspects of failing to live up to their promises. If the firm provides generic responses, its engagement team follows up on specific questions to company management.

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Ilya Figelman

Acadian Asset Management LLC, together with Equity Trustees, have launched a new multi-asset absolute return fund in Australia for those seeking a consistent and diversifying stream of returns, with low correlations to equities and other asset classes, while maintaining a prudent and defensive level of risk.

The Acadian Global Macro Fund will be available for institutional and wholesale investors seeking a defensive alternatives exposure.

It uses Acadian’s well-established systematic approach to exploit inefficiencies across and within global markets.

Acadian currently manages over A$2bn for global clients across a suite of multi-asset, absolute return strategies with varying risk profiles.

The new fund aims to deliver a positive return above the S&P/ASX Bank Bill index with a target volatility of around 6 per cent over rolling three-year periods.

BT Investment Solutions (BTIS), through its BT Diversified Alternatives Fund, is the initial investor in the fund.

“Acadian’s Global Macro Fund is designed to seek absolute returns regardless of market conditions, by identifying and capturing diverse sources of return through portfolios that can endure severe market stress,” said Ilya Figelman, head of Acadian’s Multi-Asset Class Strategies team.

The strategy is implemented via long/short positions across five major asset classes including equity markets, bonds, FX, volatility, and 25+ underlying commodities. Portfolio construction takes into account the complexity of cross-asset relationships across the whole portfolio rather than being based on the concept of risk premia within asset class silos.

“We believe our approach provides a high level of differentiation, particularly compared to many standard Alternative Risk Premia type strategies,” Mr. Figelman added.

“Successful multi-asset investing requires an appreciation of the complex and dynamic relationships across asset classes globally. We’ve sought to systematise many of the fundamental factors that drive asset class returns and as a result, the strategy includes a range of proprietary asset-class signals, particularly in commodities, as well as incorporating cross-asset macro factors and more established factors.”

“The result is a dynamic, well-diversified global markets portfolio that aims to deliver uncorrelated, defensive returns driven by a combination of market selection within asset classes and directional positioning at an asset-class level.”

Kunal Kotwal, Portfolio Manager – Alternatives from BT, said the managers within its BT Diversified Alternatives Fund have “strong and persistent track records of successfully investing in risk premia which have clear barriers to entry, boast strong risk management skills, and possess a desire to evolve strategies as markets change.”

Equity Trustees is the responsible entity for the fund.

Russell Beasley, Executive General Manager, Corporate Trustee Services, at Equity Trustees said the provider was pleased to add Acadian to its growing list of global clients. “We are delighted to be supporting a global asset manager of such scale. We have grown to become the market-leading responsible entity provider in Australia, offering the right support, expertise, and capability for asset managers like Acadian,” Mr. Beasley said.

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Mr Wong will focus on research across all facets of Acadian’s Australian and global quantitative equity process, working alongside the global research team based in Boston.

Mr Wong has 10 years’ experience and joins Acadian from Macquarie Investment Management where he was a Quantitative Analyst, spending the past seven years doing quantitative research in the systematic equity team. Prior to Macquarie, he spent several years in investment banking, acquiring a unique mix of corporate finance and quantitative experience at RBC and before that at Rothschild.

Mr Wong has a Master of Finance, a Bachelor of Commerce (Finance), a Bachelor of Engineering (Bioinformatics) and is currently finishing off his PhD, focused on applying machine learning in financial markets. He was awarded the University Medal in Bioinformatics.

Mr Wong is based in Sydney and reports to Acadian’s Australian Head of Investments Jean-Christophe de Beaulieu.

“We are very excited to have such a strong addition to the local investment team and for the skillset that Steven brings,” said Mr de Beaulieu.

“Steven’s appointment will help us to further advance our research program as we continually look to enhance our investment process.”

“Steven will work closely with the team in Sydney and as part of our global research team. Given his skillset and experience, we expect he will be involved with various projects, including machine learning related research”.

Mr Wong’s appointment takes Acadian’s Australian team to 16 people in Australia.

Acadian is a quantitative firm founded in 1986, based in Boston USA with affiliates located in London, Singapore, Tokyo, and Sydney. It oversees A$133billion in assets under management globally as of 31 October 2020, on behalf of major pension funds, endowments, foundations, governments and other institutional investors around the world. It manages $8.9 billion in assets on behalf of Australian and New Zealand investors.

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