Quantitative Macroeconomics
EG: How does your analysis of quantitative macroeconomic models assist you in generating superior alpha, compared with other funds?

AA: We analyse the market environment and adjust our portfolio positioning to generate the largest return given the limited risk we are taking. Assessing the macro environment and different mispriced opportunities is essential. For example, there are many indicators showing that inflation is on the rise: increasing oil and other commodity prices, US wage inflation, further monetary easing in Europe following ‘Brexit’, further reductions in interest rates, etc. Investing in strategies that will protect and enhance investors money is the first objective. Putting these strategies together in an efficient way to ensure that the portfolio compensates investors for the risk taken is another step. Continuous monitoring of a portfolio and adjustment to the changes in the macro environment are essential.


EG: What are some of the unique characteristics of your management
style that enable your AIM Multi Asset Fund to be successful in comparison to other hedge funds at a time where global equity indices have slowed?

AA: The interaction of quantitative systematic investment strategies with the common-sense approach of discretionary management is a defining characteristic of the way we manage money. While purely discretionary managers are struggling to find sources of return without a trend in markets, and model-driven trading that doesn’t make sense in the current environment has incurred sharp drawdowns, we have been able to harness both approaches to provide solutions to existing problems. Whether in making correct calls on the British Pound around ‘Brexit’, benefitting from foreign currencies correlated with the oil price recovery, temporarily disabling our long-short momentum trading, or exploiting mean reversion on equity index spreads, this interplay has been essential to our success.

EG: You have been tremendously successful as a hedge fund manager, and under your leadership, the award-winning team at AIM previously managed $6 billion at UBS, and $2 billion at Insight Investment. What macroeconomic trends you see on the horizon within the next 5-10 years, and how may investors prepare?

AA: As ever, China will play a huge role in determining macroeconomic trends in the future, with a restructuring of their debt and overall economy on the cards. It’s likely that the Yuan will appreciate heavily over the next decade and create heavy inflationary pressures in the region.  Globally, we should expect stable but mediocre growth, driven in large part by the more advanced and developed economies. Emerging markets, however, will slow to far lower levels of growth than they have enjoyed over the last decade. Much of the growth around the world will primarily be supported by lower commodity prices. Both industry growth and household aggregate demand will benefit from lower input prices.

Overall there will be much divergence in economic performance, due to policy choices in the context of influencing structural reforms, given the reduced fiscal stimulus to come. There will, as ever, be significant economic (e.g. the so called ‘hard landing’ in China) and geopolitical (Middle East, Russia, China/Japan) risks that need to monitored closely. It is, of course, impossible to know what the landscape will be in 10 years but the key is to have the right logic and systems in place to cope with the challenges that are to come.

EG: What advantages would you say your experience in successfully leading portfolio construction at UBS Wealth Management, Insight Investment, and managing over £500 million in Assets Under Management, offer to new clients of AIM?

AA: Quantitative analysts and portfolio managers are on the rise in the industry but, in Dr. Ana Armstrong, we have a long and healthy track record of providing inflation-beating solutions and performance. She was trained by Dr. Hansjoerg Borutta at UBS and experienced working alongside some of the highest calibre quantitative minds in the industry. The company also has access to the most innovative, industry-leading research and is able to efficiently implement its ideas.

EG: How do your professional qualifications assist clients with their fund performance and analysis?

AA: Financial Markets have become more sophisticated as the market data industry has been growing exponentially over the last two decades. Processing of information that relies on algorithmic trading has been growing in demand. Most quantitative analysts who are looking at comprehensive sets of data, identifying inefficiencies and strategies that can generate positive returns in the relevant market environment are highly educated PhDs. The times of traders trading one particular instrument are gone. Traders are being replaced by skilled quantitative analysts who are better equipped to deal with the increasingly inter-correlated market environment.

EG: Could you explain what fundamental factors enable AIM to provide-inflation beating solutions that may be advantageous to institutional, retail, and family office investors?

AA: Inflation is the ultimate destroyer of an investor’s assets. Coordinated global easing of monetary policies and soaring commodity prices will further grow inflationary pressures. Our small but experienced team has a wide range of expertise and are able to act on strategies or ideas quickly.