QAS’ top alpha-generating thematic strategies in 2019 were US Large-Cap New Economy Focus, China, Global ESG and Global Small-Cap.
Global Equity markets delivered amazing returns across all regions in 2019. The S&P 500 finished the year with an astonishing +31.3% return.
The QAS Customized Thematic Investment Model Portfolio Program was designed with the primary focus of maximum alpha generation for our clients – investment professionals. It is pleasantly rewarding to see that a vast majority of our strategies delivered significant excess returns over their respective benchmarks in 2019.
Our main performance metric has always been “Excess Return” rather than “Total Return”. Let’s review our 2019 year-end performance!
In 2019, our #1 Alpha-Generating Strategy was the “QAS US Large-Cap New Economy Focus Index” that delivered +47.0% vs. +31.3% SPY (+15.7% Excess Return). This “long-only” strategy is based on a unique stock selection (“New Economy” concept) and risk-management algorithm that employs various sources of alpha and other portfolio construction techniques that effectively contribute to the bottom line.
While many global equity markets continued making new all-time highs throughout the year, there were some market-segments such as China, Global ESG, Asia-Pacific, UK and Global Small-Cap that still remained significantly below their previous peaks due to above-average volatility in these markets during 2019. We are happy to report that our strategies that cover these segments significantly outperformed relative to their benchmarks. This is mainly attributable to the superior risk-management techniques in the underlying algorithms that helped avoid multiple drawdowns (see the performance table below).
The QAS China All-Cap Equity with Protection Index was the #2 “Alpha-Generator” in 2019, delivering a +26.2% return vs. +14.8% FXI, outperforming the benchmark by +11.3% (!!).
Our #3 leading thematic strategy in 2019 was the QAS Global ESG Equity-Bonds Index, representing our ETF-based balanced global stocks-bonds approach. The strategy returned a strong +29.6%, outperforming the benchmark by +9.5%. Despite its lagging EU and EM segments, the global ESG investment revolution is well underway. We believe that our balanced global stocks-bonds approach provides a unique solution for this new marketplace.
See all major QAS strategies’ performance in the table below, sorted by “Excess Return”.
The QAS Japan 20 Stock Selection and QAS Gold Long-Short were among the lagging strategies in 2019 due to some above-average fluctuations in momentum between the index rebalancing periods. However, despite the recent performance weakness, these strategies continued to outperform on a 5-yr annualized average basis (see the above table for details). We believe the underlying mechanics of our quantitative algorithms designed for these strategies remain strong and sound and well positioned for any changes in market conditions in the future.
We are expecting to implement more new and exciting innovative thematic strategies in 2020.
Please contact us to learn more about other research programs and incentives offered by QAS.
For more information please visit www.qas-service.com
Happy New Year from QAS!