FAQ


QUANT INVESTING

Quant has been around for a long time. Quants, who use systematic factor-based models to analyse and invest using widely available data, have a long history in equity management. It dated to the early 20th century with the publication of the ground-breaking paper “The Theory of Speculation” by Louis Bachelier in 1900. It was the first scientifically thorough study of statistical behaviour of stock prices. From a few early adopters, quants nowadays have found their place as providers of niche investment approaches alongside traditional fundamental managers.

Thanks to the advancement of computing power and development of comprehensive financial databases.

The volume of financial data available today continues to grow at almost the same speed as computing power. No individual can hope to assimilate even a tiny fraction of these data to assist them in their decision-making process.

Our investment strategy relies on our ability to process vast amounts of data consistently and dispassionately.

Using computer models and large amounts of current and forward-looking data, the computer model predicts the best portfolio of stocks by looking at multi signals to form the basis of identifying the best portfolio to own at current situations. Important signals that define the performance and characteristic of a stock are called factors. By far the most successful factors over time have been Value (cheap stocks) and Momentum (stocks that are working).

There are thousands of stocks you could buy globally. For humans, those decisions are built on not just numbers.

Unemotional investing. The quant approach constitutes a safety in numbers approach while removing any emotional response that a human might inject into the process. Investing is difficult, and being human makes it harder. That’s why even the smartest people are affected by cognitive biases, especially when it comes to investing.

Discipline. The reason quant strategies work is that they are based on discipline. If the model is right, the discipline keeps the strategy working with super speed computers to exploit inefficiencies in the stock markets.

A style diversification. Advanced mathematical techniques allow quant managers to combine different investment strategies in a single portfolio. For example, a quant may build computer models that look for different factors that can influence a company’s stock price. One model may look for companies that are currently undervalued, while another may look for stocks with rising prices.

Big Data. The quant models are capable of analysing a very large investments data simultaneously, where the traditional analyst may be looking at only a few at a time. Thus, it is time consuming and traditional analyst may have missed or overlooked an investment opportunity.

Quant investing is developed based on cutting edge mathematical models to identify patterns among decades worth of stock prices and other financial market data. The goal is to find previously successful investment strategies and apply that to consistently outperform the market over time. For example, investors might examine 10 years’ worth of stock returns based on earnings revisions consistently outperformed other shares during that time. The investors would then look for the stocks with those characteristics in today’s market and buy them.

This is a different approach from fundamental investing, where, for example, a typical investor might research a company and its stock by examining financial statements and evaluating the quality of its management, customers and competitors.

In contrast, quant investing is based entirely on data and takes away the subjective elements of investing.

It is unjustified to associate all quantitative approaches with “Black Box” investing. LTCM make it famous as a black box investing. The problem with LTCM black box is that you don’t know what’s inside it.

Our QAM model is based on fundamentals, easy to explain and understand. We do not give opaque and non-transparent on how it works. Talk to us to find out more.

INVESTMENT MANAGER

QAM is a Registered Fund Management Company (“RFMC”) with the Monetary Authority of Singapore (“MAS”) under Paragraph 5(1)(i) of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations (Rg. 10).

QAM Global Equities Fund Ltd is currently recognised as a professional fund by the Financial Services Commission (“FSC”) of the British Virgin Islands under Section 55(2) of the Securities and Investment Business Act, 2010 and in accordance with the provisions of sections 55(1) and (5) of the Securities and Investment Business Act, 2010.

QAM practices a systematic investment style, whereby it uses proprietary models to screen over 6000 active companies worldwide for mostly fundamental investment criteria. The models are based on a company’s relative valuation and the relative strength of its earnings momentum versus its peers. A frequently rebalanced selection of a large number of the top percentile stocks according to this ranking mechanism forms the basis of its large long stock portfolios. Additionally, a trend following adaptation methodology that systematically adapts to changing market conditions is applied.

The strategy is entirely driven by multifactor dynamic quantitative models based on a multitude of factors ranging from consensus earnings forecasts, dispersion in earnings forecasts, earnings revisions, earnings quality, price momentum, valuation factors like price to book, price to cash, dividend yield etc. The model selects a portfolio with 50 -100 stocks on a monthly basis.

• Dynamic factor weighting process
• Dynamic hedging process
• Long and short stocks + short index futures
• Net exposure (on a dollar basis): Class A 0% to +100% and Class B 100%
• Max. gross exposure 300%

Our approach to risk management is multi-pronged:

• We manage investment risk so that risk taken is per investment mandate and expected returns
• We manage regulatory and compliance risks to safeguard the interests of QAM and investors, and to comply with applicable laws and regulations
• We manage operational risk with solid internal controls and processes to support QAM operations
• We manage counterparty risks to minimise the impact to QAM if any counterparties were to default

INVESTOR

As a RFMC, we serve high net worth individuals, family trusts, investment companies and institutional funds that qualify as an “accredited investor” or an “institutional investor” or a “qualified investor”, each as defined under the Securities and Futures Act (Cap.289) of Singapore (as consolidated, amended, supplemented, restated or revised from time to time) and the subsidiary legislation relating thereto.
With your objectives in mind, determine how much risk you’re prepared to take. Do you want to adopt a conservative, moderate or aggressive investment strategy?
Ask yourself the following questions before you make your decision:
• Are you prepared to make long-term investments, which will allow you to take greater risks for higher returns?
• If you’re going for short-term, high-risk investments, can you afford to lose some of the money you invest?
• If you want your money to be safe, will you be content with a moderate rate of return?
• If you opt for safe investments, will the returns be enough to cover inflation?
• Mutual fund or professional fund
• Private managed account

A private managed account can be set up to accommodate accounts and clients who needed to meet specific objectives that did not fit within the constrictions of a mutual fund investment. It is the freedom of choice of professional managers, portfolio customization, objective investment advice for a set fee, diversification (or concentration) and other general flexibility.

A similar type of account or arrangement is termed a “separately managed account”, “separate account”, or “private account” when opened directly with investment management firms.

Please contact us for more info on this type of account.

Each fund has its own investment objective and investment strategy. You need to make your decision based on your own investment objectives and risk tolerance.

Some investors can tolerate with higher investment risk because they aim for higher returns in the long term. Others may prefer lower risks for lower returns.

For example:
If you are looking for returns that are uncorrelated to equity markets, you may want to consider QAM Global Equities Fund Class A, a neutral long/short equity fund that has low market risk and low correlation to the stock market.

On the other hand, QAM Global Equities Fund Class B, a long only equity fund has more less similar risk to the market because the Fund is highly correlated to the stock market.

Please consult your financial advisor for better decision.

Investment in the Fund is subject to a minimum of US$1 million.

An initial sales charge is deducted from your investment by the fund distributor with the maximum amount chargeable as stated in the fund prospectus.

An annual management fee is charged by the investment manager to cover the management and operation of the fund. As it is incorporated into the price of the fund, it does not appear as a separate charge on your holdings statement.

A performance fee is charged after a certain performance levels are attained in a set period of time.

The fund prospectus contains the details of charges and fees explained above.

Markets move in cycles. Prices of stocks can be ups and downs, over short periods. But the longer you stay invested, the greater the probability that your investment will generate a positive return.
You will be provided with monthly statement from the fund administrator or custodian.
On a real-time basis, you can track your investment by using our automated email system.
Note: Past performance is not an indicator of future outcomes; investing exposes you to risk of loss due to random unforeseen events or changes in the economic cycle