In has become increasingly difficult for investors to earn a competitive return without excessive volatility in a normal balanced portfolio with a static asset allocation. Low bond yields, expensive equity valuations, and higher volatility from program traders and central bank distortions have not made the situation any easier.
Many managers are able to generate good returns in bull markets, but few are able to hold on to performance when the business cycle turns negative. In the long run most active managers underperform. There is a need for investment strategies that can deliver attractive risk-adjusted returns in all phases of the business cycle.
Quantrust's invested approach - a result of years of experience in the investment industry - has been developed in order to help institutional investors - mainly Dutch pension funds - achieve their investment objectives irrespective of the market environment. Quantrust launched its investment approach in 2000: dynamic asset allocation combined with passive index funds.
Quantrust has been able to consistently outperform its client's benchmarks through the investment cycle, mainly due to strong outperformance in bear markets, when it is most important.
1. MACRO THEMATIC VALUE INVESTING.
Nowadays news and all imaginable data are readily available but this does not make it any easier to invest successfully. Most of what you read is noise. Usually only a few big macro or political themes determine the direction of asset classes.
To identify these investment Quantrust believes in combining the quantitative and the qualitative. Quantrust sees investing as an art as well as a science.
The quantitative in Quantrust comes from the highly disciplined investment process we follow, in which we monitor global developments regularly and consistently. The aim is to pick up on changes in the big macro and political themes that drive markets. And to understand if our investment rationales still hold.
Furthermore, the quantitative comes from the fact that we never invest in a strategy without a quantitative rational: we only invest in value strategies, for which the upside potential is much greater than the downside risk.
But our greatest assets are our people: Quantrust never takes decisions on the basis of quantitative models alone. Decisions are taken by people. In a rapidly changing world, we believe only people are able to take a broader perspective on events and deduce the big picture from all the quantitative data and competing economic and investment theories. We find that most quantitative investment models are able to work well in a certain market environment but fail when the multi-polar world we live in and different participants in investment markets change the assumptions those models are based on.
2. DYNAMIC Asset allocation.
As asset allocation accounts for 80-90% of investment performance, only a dynamic asset allocation strategy allocates enough resources to the key decisions that drive performance.
Furthermore, it is a flexible strategy that can adjust to a changing economic and market environment and can benefit from the incongruence of political, economic and investment market cycles in the current globalised and multi-polar world.
3. PASSIVE SELECTION.
Active funds tend to underperform in the long-term, are expensive and monitoring active managers tends to be a distraction from the key asset allocation decisions. Quantrust prefers index products so it has more time to focus on the key asset allocation decision.