A Closer Look at Acadian Asset Management

Boston-based Acadian Asset Management is an international investment management firm with affiliates in Singapore, Sydney, Tokyo and London. The firm aims to be their 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. 

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 and international 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 their portfolios with top-down and bottom-up stock picking.

It is easy to spot the quantitative emphasis with Acadian Asset Management. The company openly boasts about its "scientific approach to innovation" and how responsible investing is embedded in their 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 about Acadian's system is its dedication to algorithms, which cuts down on slippage and reduces transaction costs and other advisory fees.

The executive staff at Acadian Asset Management is well-entrenched. Several of its high-ranking officers, including co-chief executive officer (CEO) and co-chief investment officer (co-CIO) John Chisholm have worked at the company for more than two decades. Acadian is led by a team with nearly 200 years of combined tenure at the firm.

Teaming up with Chisholm as co-CEO is Ross Dowd, who was previously the head of Acadian's global client group. There are nine other members of the executive committee. Brendan O. Bradley, who is co-CIO, holds a Ph.D. in applied mathematics and a bachelor's degree in physics. Before joining Acadian Asset Management in 2004, Bradley was vice president at Upstream Technologies. Laurent de Greef leads Acadian's client solutions and product strategy group. He is also a former professor of finance.

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 a program director at the National Bureau of Economic Research and is responsible for formulating the investment research agenda for Acadian.

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 June 30, 2017, Acadian Asset Management and its affiliates managed more than $86.5 billion 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.