A Closer Look at Acadian Asset Management

Boston-based Acadian Asset Management is an international investment management firm founded in 1986. The firm has offices in Singapore, Sydney, Tokyo, and London, in addition to its headquarters in Boston. The firm aims to be its clients’ most valued resource for investment insight and success.

Acadian uses fundamental insights to identify investment opportunities. These decisions are based on empirical evidence with repeatable and transparent processes being utilized. 

Key Takeaways

  • Acadian Asset Management is a Boston-based investment firm founded in 1986.
  • Operating globally, Acadian has offices in Singapore, London, Tokyo, and Sydney.
  • The fund used both fundamental analysis and quantitative analysis for its investment strategies.
  • Acadian operates 44 investment strategies with a wide range of leverage, exposure, and risk.
  • As of Dec. 31, 2019, the fund manages $101 billion in assets under management.

Company Overview

The firm's predecessor, Acadian Financial Research, was founded in 1977 by Gary Bergstrom. It designed and implemented the world's first international index-matching strategy under the auspices of State Street Corporation (STT). Ten years later, however, Acadian Financial Research left State Street and began managing assets directly.

Today, Acadian Asset Management operates as a global equity investment firm, more boutique than all-encompassing. It focuses most sharply on heavy research, customized portfolio assistance, and long/short strategies. Acadian Asset Management uses both fundamental and quantitative analysis and manages its portfolios with top-down and bottom-up stock picking.

It is easy to spot the quantitative emphasis of Acadian Asset Management. The company openly boasts about its "scientific approach to innovation" and how responsible investing is embedded in its investment approach. An in-house research team creates internal research that works with the Acadian system.

Philosophically, Acadian Asset Management rejects the efficient market hypothesis and is positioned firmly in the active school of investment management. Its fundamental underpinnings are designed to exploit "mispricings" in the securities markets, especially globally, where markets are often much less developed than in the United States. The unique aspect of Acadian's system is its dedication to algorithms, which cuts down on slippage and reduces transaction costs and other advisory fees.

Executive Staff and Investment Team

Acadian is led by a team with nearly 200 years of combined tenure at the firm. The executive staff at Acadian Asset Management is well-entrenched. Several of its high-ranking officers have worked at the company for more than two decades.

John Chisholm is one of the co-founders of the firm and current co-chief executive officer (CEO) who developed the first versions of Acadian's quantitative strategies as well as working as chief investment officer (CIO) for a time.

Teaming up with Chisholm as co-CEO is Ross Dowd, who was previously the head of Acadian's Global Client Group. There are 10 other members of the executive committee.

The staff at Acadian is extremely focused on environmental, social, and governance (ESG) investing, which they have implemented into their investment concepts.

Brendan Bradley, who is the CIO, holds a Ph.D. in applied mathematics and a bachelor's degree in physics. Mark Minichiello is the chief operating officer (COO), joining the firm in 2000. 

The other critical member of the investment team is Malcolm P. Baker, a professor of finance at Harvard, with a Ph.D. from Harvard, a master's of philosophy from Cambridge, and a bachelor's from Brown. Baker is responsible for formulating the investment research agenda for Acadian as the Director of Research for the firm.

Asset Classes, Investment Strategies, and Products

Acadian's investment team likes to assess its "aggregate factors," which it describes as variables supported by specific observations from a range of disciplines, including statistical analysis, fundamental equity insights, economic science, and behavioral finance. Each factor, once analyzed, is classified into one of four key asset categories: value, quality, growth, and technical.

As of Dec. 31, 2019, Acadian Asset Management and its affiliates managed more than $101billion in assets under management (AUM) for its clients, most of them managing pension funds, endowments, foundations, and other large institutions.

The primary asset classes for Acadian funds are emerging markets equity, global non-US equity, regional equity, and small caps. The funds also offer so-called "concentrated" products for clients seeking higher levels of excess return and a focus on absolute risk and high risk-adjusted returns, normally monitored through Sharpe ratios.

The fund has 44 investment strategies, providing a variety of options for investors to choose from, depending on their desired exposure and risk tolerance. Strategies include:

  1. All Country Managed Volatility Equity
  2. China A-Shares
  3. Australian Enhanced Equity
  4. Emerging Markets Focused Alpha Equity
  5. European Equity
  6. Japanese Equity
  7. Non-U.S. Micro Cap Equity

The Bottom Line

Acadian Asset Management is a large investment fund that has decades of experience. The fund manages billions of dollars across the world for hundreds of clients, utilizing a variety of investment strategies suited to different investment needs.