(Pictured: Olivia Engel)
State Street Global Advisors (SSgA) won one of its first major mandates for its Global Managed Volatility Alpha strategy during the week – a $115 million mandate from the IOOF MultiMix multi-managed superannuation funds – but what is interesting about the strategy is that it tailors its global offering depending on the country it is being offered in.
The fund aims to reduce volatility, and maximise returns, but believes the causes of volatility in each country may be inherently different. That means the Global Managed Volatility Alpha strategy offering to Australian investors will be different to what may be offered in the UK and vice versa.
For example, the global strategy offering in the US has more exposure to US than the offering in Australia, and the Australian option has a bit more exposure to Japanese companies, SSgA head of active quantitative equity, Asia Pacific, Olivia Engel, says.
The strategy might sound complex, but essentially it is a long only strategy and doesn’t invest in the derivative-type instruments that are sometimes used to smooth volatility
“In minimising total volatility, [you] minimise how investors experience absolute drawdowns. Because it’s a growth strategy…it also provides the same growth characteristics that equity investors want,” Engel says.
The trust, which was launched at the beginning of the year, invests in around 100 companies.
On of the main causes of volatility for any investor in global equities will be currency fluctuations.
“And it particularly matters for Aussie investors because the Aussie dollar is so much more volatile,” Engel says.
“I think it’s rare to find an explicit assessment from managers about currency from a different perspective.”