About Arrowstreet Capital, L.P.
Arrowstreet is a global equity manager based in Cambridge, Massachusetts. It was formed in July 1999 and is majority owned and controlled by its senior professionals. Arrowstreet currently manages over A$20 billion* in assets for its clients globally, which include pension funds, foundations and corporations.
Arrowstreet's investment process
The Arrowstreet Global Equity Fund (Hedged) (the "fund") provides an exposure to Arrowstreet's global equity investment strategy which offers a diversified portfolio of approximately 125 to 300 stocks which the manager believes offer attractive return potential.
Arrowstreet adopts an active, quantitative investment approach that seeks to consistently outperform the benchmark through varying market conditions. The firm combines investment intuition with rigorous quantitative research in an effort to identify attractive stocks around the world.
Arrowstreet's investment process uses forecasting models that combine the experience and judgement of Arrowstreet's investment team with quantitative analysis to forecast individual stock returns.
Macquarie's currency hedging overlay
The fund uses a currency hedging service offered by Macquarie to hedge a varying portion of the fund's exposure to international assets back to Australian dollars. Macquarie adjusts the hedge level as the value of the Australian dollar changes. As the Australian dollar strengthens, the level of the hedge increases to reduce the magnitude of potential currency losses. Conversely, as the Australian dollar weakens the hedge level is progressively decreased, allowing for currency gains to be preserved. The hedge level can move as low as 0% and as high as 100%.
How does the fund differ?
The differentiating features of the fund include:
A multi-dimensional approach
Arrowstreet's approach recognises the importance of evaluating a stock's potential on an indirect as well as a direct basis. For example, the price of a Dutch financial company is driven not only by factors specific to the company (direct) but also by regional factors that affect all Dutch stocks and factors common to financial companies around the world (indirect). Arrowstreet attempts to quantify the impact of each of these factors in assessing a stock's expected return.
Exposure to a broad universe of stocks that includes emerging market and small company stocks
The fund includes exposure to stocks in emerging markets as well as developed markets. The fund may also have exposure to small companies. These areas of the market are generally less thoroughly researched by other market participants and therefore provide more opportunity for Arrowstreet to identify mispriced stocks.
'Core' investment approach with a lack of systematic tilts
Arrowstreet's investment strategy establishes tactical (temporary), rather than systematic (constant), tilts away from the benchmark (e.g. favouring value stocks over growth stocks, or large companies over small companies). By avoiding systematic tilts, Arrowstreet's strategy seeks to perform well and more consistently in a broader range of market environments. We believe this lack of systematic tilts, combined with the manager's approach to identifying mispriced stocks, makes Arrowstreet complementary to growth style managers or value style managers.
A team of highly experienced investment professionals
Arrowstreet is majority owned and controlled by the firm's senior professionals, which helps foster team stability and align the firm's interests with those of its clients. The investment team combines a wealth of investment experience with impressive academic credentials and links to top academic institutions. Recognising the dynamic nature of the market, Arrowstreet's continually undertakes research to refine its investment process.
Key features of the fund
| Fund name |
Arrowstreet Global Equity Fund (Hedged) |
| Responsible entity |
Macquarie Investment Management Limited |
| Investment manager |
Arrowstreet Capital L.P. |
| Investment objective |
To seek to achieve a long-term (at least 7 years) total return before fees and expenses that exceeds the MSCI All Country World Index ex Australia, in A$ unhedged with net dividends re-invested. |
| Investment approach |
Active, quantitative investment approach that seeks to capitalise on opportunities across a broad universe of stocks |
| Asset allocation |
International shares: 95% to 100%
Cash: 0% to 5% |
| Inception date |
6 March 1997** |
| Performance Benchmark |
MSCI All Country World Index ex Australia (AUD unhedged) |
| No. of stocks |
Generally 125 - 300 |
| Management costs |
1.28% p.a. (inclusive of the net effect of GST) |
| Buy/sell spread |
0.40%/0.35% |
| Entry fee |
Nil |
| Exit fee |
Nil |
| Suggested minimum investment timeframe |
At least 7 years |
| Minimum investment |
Indirect investors: refer to the operator of your serviceDirect investors: minimum initial investment $50,000 |
| Distributions |
Paid semi-annually as at 30 June and 31 December |
*as at 30 September 2006. Source Arrowstreet Capital LP
** The fund, which has been in existence since March 1997, will from December 2006 gain exposure to Arrowstreet Capital, L.P's investment process through an investment in the Arrowstreet Global Equity Fund (ARSN 122 036 006).
Investments in the Arrowstreet Global Equity Fund (Hedged) are offered by Macquarie Investment Management Limited ABN 66 002 867 003 AFSL No. 237492 ("MIML").
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