At the IMAP Managed Account Awards, Macquarie Investment Management took out the Australian Equities Small Cap category.
When out comes to investing, Macquarie Investment Management understands that different investors have different needs when it comes to investment structures. While many investors are content with traditional managed funds, others prefer to access their Australian equities via a portfolio of direct securities.
For those clients choosing the latter approach, Brad Partridge - a portfolio manager at Macquarie Investment Management - says they can access Macquarie’s investment management capability via an SMA, which targets a similar risk and return outcome to the managed fund, but “with the additional benefit of a more transparent, concentrated and lower-turnover portfolio”.
In fact, the investment philosophy for Macquarie’s Australian equity strategies is based on four beliefs of how to outperform the Australian market:
- Typical human behaviour leads to biases that can be exploited;
- Biases can be systematically captured and combined in a portfolio to deliver a specific investment outcome;
- Ongoing research is required to understand changing investor motivations and behaviours, ensuring the strategy remains current; and
- Systematic strategies are best implemented with awareness of market conditions.
“Proprietary quantitative models can provide a roadmap to navigating markets. Portfolio managers are required to determine the probability and degree of model success across varying market conditions,” Brad says.
Investment process
So, what does Macquarie’s Australian equities small cap investment process look like?
According to Brad, the small companies strategy uses quantitative techniques to exploit and/or neutralise biases in investment decision-making.
“To do so, the process captures quality, momentum and value characteristics that have historically generated reliable excess returns in the Australian market. A portfolio manager overlay is also applied, linking the models to current market conditions, recognising that there are situations or events that may not be captured using a systematic process,” he says.
“The approach takes advantage of a broad range of investment themes to drive performance, whilst aiming to minimise any unwanted risks, producing a robust and well-diversified portfolio.”
Supporting the investment process, Macquarie’s ongoing research program focuses on continuously evolving and adapting its investment process to changes in the market and investor dynamics.
“At the end of the day, performance is the key thing that matters,” Brad says. “Our small companies SMA portfolio seeks to deliver strong outperformance versus the Small Ordinaries benchmark and long-term capital growth for our clients. That’s how we measure success.”
IMAP Award
Brad says it’s very “special” to be the inaugural winner of the IMAP Managed Account Award for the Australian Equities Small Cap category, particularly as Macquarie has been managing Australian equity portfolios within managed account structures since 2001.
“When I joined Macquarie’s managed accounts business in 2005, many industry observers expected SMAs to be the ‘next big thing’. In hindsight, it took much longer than most people expected, but SMAs are now one of the key trends in investment management,” says Brad.
“So, to personally see the growth of this sector over the past 13 years and for Macquarie to be recognised for its strong investment management capability, is both very rewarding and humbling.”
Finalists
IMAP congratulates all the finalists in the Australian Equities Small Cap category.
- 8ip
- Macquarie Investment Management
- Pearl Funds Management
- Watershed Funds Management
