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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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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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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