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Industry superannuation fund UniSuper has invested $500 million in a new hedge fund that is targeting ASX300 companies with a long and short strategy that aims to deliver returns of up to 6 per cent above the benchmark.
The investment seeds the new RQI Australian Diversified Alpha Long Short Fund, which is being managed by RQI Investors.
The Sydney-based RQI, a global quantitative manager, sits within the First Sentier Investors group (formerly known as Colonial First State Global Asset Management) and manages $23.8 billion in assets.
Drawing on the algorithm-based systematic investment process of the RQI Australian Diversified Alpha strategy, the new fund invests in ASX 300 companies.
It combines an adaptive leverage approach to long-short investing ranging up to 160 per cent long and 60 per cent short, while maintaining 100 per cent market net exposure.
This allows the fund to leverage up to 160 per cent of its value for long positions and 60 per cent for short positions.
The fund, which is open to institutional and wholesale investors, is targeting consistent risk-adjusted gross returns of between 4 and 6 per cent per annum above the benchmark.
“We’re very pleased to launch the RQI Australian Diversified Alpha Long Short Fund, which is a testament to the experience and expertise of our team, and our propriety research and insights that underpin our investment process,” says Andrew Francis, the CEO of RQI Investors.
“We are very fortunate to have secured the support and backing of one of Australia’s largest and most sophisticated institutional investors.”
UniSuper, which was originally established as a fund for the higher education sector but is now open to all Australians, has close to 650,000 members and $149 billion in funds under management.
UniSuper’s investment in the fund is backed by management team at RQI Investors that includes lead portfolio manager Dr Joanna Nash and co-portfolio manager Dr Ron Guido, alongside portfolio manager Dr Wang Chun Wei and head of investments Dr David Walsh.
The fund adopts a systematically-driven approach using fundamental insights and by leveraging AI and machine learning, RQI says the team identifies “alpha opportunities from a wide range of information sources, both positive and negative”.
The fund systematically selects companies for long and short positions while maintaining 100 per cent net exposure to the market.
“We believe the fund has the ability to deliver strong excess returns with robust risk management through our evidence-based, systematic approach,” says Nash.
“The use of our adaptive leverage long short process allows the exposure of the fund to vary up to 160/60 giving the flexibility to take account of changing market conditions.”
The launch of the new alpha fund follows the first overseas expansion by RQI Investors last month with the launch of an Irish domiciled fund of its Global Value Strategy, which first launched in 2008.
The strategy collectively manages more than $3.04 billion and has been described by Francis as “highly regarded by global asset consultants”.
The fund, which has been seeded with two investments totalling US$50 million ($76.6 million), is available to UK, European, Singaporean and Canadian investors.
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