Seven Investment Management has launched two new Quantitative Building Block Funds, designed to enhance diversification and boost portfolio resilience across its model portfolio and fund ranges.
The new range, developed in partnership with JPM Mansart, includes the Core Quantitative Investment Strategies (Core QIS) Fund and the Diversified Alternative Strategies (DAS) Fund. Both funds give advisers and their clients access to a diversified basket of alternative investment strategies through a single, liquid and cost-efficient fund structure.
The funds have been constructed around several key investment principles: low correlation to traditional asset classes, transparency, daily liquidity and cost efficiency. By targeting return drivers that differ from those of equities and bonds, the strategies are intended to provide diversification benefits during periods of market stress, while helping smooth portfolio returns over time, 7IM said.
The Core QIS Fund is a more defensive fund, combining a range of alternative investment techniques to target returns above cash over the long term, while the DAS Fund offers broader exposure to alternative return opportunities, seeking greater long-term growth potential while maintaining diversification benefits. Both funds, which target volatility of 5% to 7%, are used in 7IM’s funds and model portfolio solutions.
7IM estimates that implementation will deliver a reduction in portfolio costs of approximately two basis points, while offering access to a wider range of alternative strategies than through individual fund selection.
Shanti Kelemen, co-chief investment officer at 7IM, said: “By combining sophisticated quantitative alternative strategies with the simplicity, transparency and liquidity advisers require, we believe these funds can play an important role in delivering more resilient portfolios and better long-term risk-adjusted returns for investors.
“For years, investors have been told they need alternatives, but too often those alternatives have simply been different ways of owning economic growth. Property, infrastructure and even private markets can still be heavily influenced by the same forces that drive equity and bond markets.
“What investors really need are genuinely differentiated return streams. Quantitative market-neutral strategies offer the potential to generate returns from entirely different sources, while maintaining the liquidity, transparency and cost efficiency that advisers increasingly demand.”
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