IFM Investors - Asia Pacific Market Neutral Strategy

Respected, sizeable
and experienced
investment team

Core skills in
quantitative,
fundamental investing

Strong track record of delivering high-quality alpha

We believe that alpha can be sourced from repeatable and predictable behavioural biases, specifically momentum and value investing. At IFM Investors, we recognise that purely quantitative driven strategies that rely on systematic factor screens are insufficient and may falter over time, so our fundamental overlay seeks to mitigate certain risk factors (i.e. value traps, crowded trades) that purely quantitative driven strategies tend to ignore. The team has a formal commitment to fundamental research and continued improvement to investment processes. This hybrid approach allows us to capture the returns from value and momentum signals but we also take into account the stock-specific risks that traditional quant investors tend to overlook.

Investment philosophy

A pure alpha Asia-Pacific equity market neutral strategy, focused on delivering net returns with moderate annual volatility. The strategy is overlaid with a fundamental approach called ‘Expectations at Risk’ ([email protected]) which seeks to mitigate certain risks of pure quantitative models, such as turning points and hidden value traps.

The strategy targets consistent alpha generation through a highly diversified portfolio combined with tight risk management and limited country and sector exposures. It invests in five equity markets in the Asia-Pacific region, namely Hong Kong, Australia, Korea, Taiwan and Singapore.

What sets us apart?

Experienced team

The founding team members, Lachlan Davis and Mark McClatchey, have worked together for more than 17 years and have built an experienced, stable team, with an average tenure of 10 years.

Our unique blend of market experience and research capability enables us to create solutions based on the knowledge of experienced practitioners as well as the latest research.

Track record

The Active Equities team has a long history of generating high-quality alpha with controlled risk, outperforming investment objectives. The team has more than 20 years' experience in quantitative and fundamental investment management in Australia and more than 10 years' experience in Asia.

Fundamental overlay

Our proprietary fundamental overlay helps mitigate the pitfalls of relying solely upon a quantitative approach. The ‘Expectations at Risk’ ([email protected]) overlay identifies the key drivers of a stock’s future earnings and assesses likely earnings outcomes for each stock.

Staff alignment

A key differentiator for IFM Investors is the philosophical alignment of our firm with the interests of its investors. Our fiduciary duties are instilled in our employees and are reflected in our stewardship of client assets. Our priority to maximise net returns closely aligns us with the objectives of our owners, many who are also our clients and invest with us on behalf of their members.

Cost efficiency

We aim to ensure that fees are fairly priced across our global product range. We seek investments that make sense on a risk-return basis for like-minded, well-capitalised institutional investors.

Distinctive fundamental overlay is a key risk management tool

A crucial component of the investment process is the team’s fundamentally based ‘Expectations at Risk’ ([email protected]) overlay. This integral step is designed to mitigate risks that traditional quantitative strategies tend to ignore. The common pitfalls of quantitative investing include being caught by ‘value traps’ and in ‘crowded’ momentum trades. [email protected] identifies the key drivers of a stock’s future earnings and assesses likely earnings outcomes for each stock. This helps us quantify the likely upside/downside risk in a stock’s potential earnings, as well as the level of dispersion in possible earnings outcomes.

Experienced investment team

The Active Equities team is a respected and experienced team of investment professionals based in Sydney and Hong Kong. The team is led by Lachlan Davis, Head of Large Cap Active Equities, with Mark McClatchey as Head of Research.

The team has more than 20 years' experience in quantitative and fundamental investment management in Australia and more than 10 years' experience in Asia. It has managed equity portfolios across the risk spectrum, from enhanced index to long/short and hedge fund strategies and is highly experienced in managing large amounts of AUM.

The team applies its core skills in both quantitative and fundamental investing across a range of strategies using the same underlying investment process and model.