Quant Asset Allocation Fund

This is as a moderate risk flexible domestic asset allocation fund suitable for both individuals and institutions. It targets returns that are above those of a median balanced fund by using a quantitative process that is both consistent and has clear links to economic intuition.

To target returns above the median return of the Micropal Domestic Asset Allocation peer group, over the medium to long term (longer than 3 years); and to do this at lower risk levels than those of general asset allocation portfolios. Income generation is a secondary objective.

The process of the Quant Asset Allocation Fund stands on 3 pillars:

• Tactical Asset Allocation to determine the fund’s allocation to various asset classes – equity, bonds, cash etc.
  
• Multi-factor Asset Selection model that identifies factors that are expected to be the main drivers of individual instrument performance in the short term, and using an optimal combination of these factors to rank and select stocks.
  
• Portfolio construction tool that employs state-of-the-art quantitative optimisation techniques to construct an optimal portfolio that takes account of a desired risk budget or requirement.

This process performs significantly well in trending markets and when market volatility levels are subdued.

Generally most models fail to capture market inflection points; our models would also be subject to this. However the flexibility to switch asset classes and the ability to reduce the risk budget in the Portfolio construction phase can cushion the effects of this.

We have been able to identify and apply the above quantitative tools and models appropriately for our purpose and objectives. These models are not subject to a “black box” approach but extend easily to intuition.

In addition the Fund has a solid long-term track record with stable performance as a result of a consistent and repeatable process.