High-conviction strategy and index unaware

Staying index-unaware and favouring a high-conviction strategy saw Quay Global Investor’s (QGI’s) Global Real Estate Fund succeed in the Global Property Securities category.

The firm, which was also a finalist in the Emerging Manager category, credited its success in the global property sphere to its differentiated and innovative approach.

“When we looked at most strategies in our universe, they were highly index-aware, poorly aligned, had questionable long-term performance track records, and we thought it was a sector that was ripe for innovation,” said QGI’s principal and portfolio manager, Justin Blaess.

Their strategy, Blaess said, focused on preserving capital and providing acceptable long-term total returns, with portfolio managers Blaess and Chris Beddingfield deciding on an investment objective of CPI plus five per cent per annum.

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“Underpinning our philosophy is, first and foremost, preservation of capital, and then ensuring our investors enjoy a better standard of living tomorrow than they do today,” said Blaess.

Blaess said another key competitive advantage was that the firm lacked the capacity constraints of most of its peers, instead opting to cap future assets under management (AUM) at a level where they could still add value.

“For us, the proof is in the pudding,” he said. “The strategy has been going for four years, we’ve got peer-leading returns and superior risk return metrics,”

The fund has outperformed the index by 3.65 per cent, with the index producing returns of 3.66 per cent and the Global Real Estate Fund producing returns of 7.31 per cent, according to FE Analytics.

“Our strategy is truly differentiated and, we’re one of the only truly index-unaware strategies in our universe.”

While the judging panel noted the three-person investment team was the smallest in Lonsec’s global property securities universe, Quay was able to outdo the peer group in 2017.

The Principal Global Property Securities Fund was a nominee for the category, with the fund manager crediting its success to skilled portfolio managers who carry out rigorous, fundamental research on all investment opportunities.

Finalist Resolution’s Capital Global Property Securities Fund (Unhedged) named a disciplined investment process and a strong focus on long-term wealth preservation and appreciation as key drivers in its performance.

The fund manager said long term perspective, a depth of experience and knowing your strengths and weaknesses was critical as an active investor.