Collective strategy
The UCITs version of the systematic global equity strategy was launched at the end of last year. Its diversified portfolio of around 250 stocks has not changed much in the first six months, with no huge bets in any particular sector or country.
His largest holdings currently are insurance companies, both health and life. He also owns a couple of airlines (specifically referencing the ‘unexpected growth’ argument he made earlier), automobile manufacturers and technology companies in the US. All in, Apple is the largest single holding but this still represents just 3% of the total.
Apple contributes 1% to his strategy’s active share, the difference between the 3% of the fund that is in Apple and 2% in the benchmark.
“Many investors,” he says, “claim to be benchmark-agnostic until they start underperforming the benchmark; then they become very benchmark aware so we want to prevent this kind of exposed regret.
“You want to know how much you deviate from the benchmark and where you take the active risks.”
Zhou is a great believer in efficient markets, to the extent that he regards the benchmark as “a well-run machine”, incorporating a great deal of information in its pricing and ultimate valuation.
What he and his QIG team endeavour to do, on behalf of the systematic equity strategy at least, is look for unexpected growth to deliver a fully invested, well diversified equity strategy. This is something they have done on behalf of institutional investors since 2010, before launching a UCITs version at the end of last year.
