Challenger Solutions Spectrum Systematic Alpha Strategy
Three years of strong investment performance and counting
Ongoing strong performance
The Challenger Solutions Spectrum Systematic Alpha Strategy (Spectrum) has delivered a cumulative gross return of 28.92% and an annualised gross return of 8.64% p.a. in the three years since it launched in July 2022.* That compares with a 3.81% p.a. return for the Strategy’s cash benchmark.
Performance has been positive in 27 out of 37 months (73%) since inception, demonstrating the ability of the team to deliver not just positive, but also consistent returns over time.
Low volatility
Volatility for Spectrum has been just 3.26%, well below both equities and bonds. Low volatility reduces the risk of large investment drawdowns, and the maximum drawdown for Spectrum has been 3.46%. That compares favourably with -13.2% for Australian equities[1] and -5.8% for Australian fixed income[2] over the same period.
Low correlation
The Strategy has an explicit objective of delivering uncorrelated returns, and this has been born out with correlation to Australian equities of 0.03 and correlation to Australian fixed income -0.17.
Low correlation means the performance of Spectrum is not dependent on market direction. For example, since July 2022, Australian equities have had negative performance in 13 months. Spectrum has delivered positive performance in 11 of those months.
These diversifying qualities make Spectrum a potentially attractive addition to most investment portfolios.
Differentiated investment approach
Spectrum is a multi-strategy systematic investment strategy targeting positive absolute returns and is intended to be a diversifying investment. The team uses quantitative and qualitative analysis to identify market distortions and build a portfolio of systematic strategies to meet the investment objectives of consistent returns with low correlation to outright market direction.
By actively allocating to systematic strategies spanning multiple asset classes and a broad range of strategy style, the portfolio managers seek to deliver a highly differentiated return stream.
Because the approach doesn’t rely on any individual style of systematic strategy or asset class, it is less susceptible to the changes in market environment that sometimes impact other investment approaches.
In addition to being diversifying to equity and fixed income, Spectrum can therefore be a good complement to other alternative investments such as private equity, private credit, and even other types of hedge fund.
Liquidity benefits for investors
Spectrum provides investors with the flexibility to apply for or redeem their investments on a daily basis with one business day’s notice. This high level of liquidity is another attractive feature that distinguishes Spectrum from other, less liquid, sources of uncorrelated returns.
About the Challenger Solutions team
The Challenger Solutions team are alternative investment and derivatives specialists with extensive global experience in absolute return and cross-asset strategies, encompassing portfolio management, trading, structuring and risk management.
With 56 years of combined investment experience, the team has traded through multiple economic cycles and brings that considerable experience to bear to deliver outstanding investment outcomes for their clients.
For further information
Visit https://www.fidante.com/au/investment-managers/challenger-solutions or contact us:
Institutional investors and consultants
Liam McDermott: +614 66 563 890 | lmcdermott@fidante.com.au | institutional@fidante.com.au.
Financial advisers, Wholesale or HNW
bdm@fidante.com.au, or click here to find details of your local representative.
Disclaimer:
* Returns are gross of fees based on the Fund’s Class I. Investment is restricted for this class. No allowance is made for tax when calculating these figures. The Inception date for Class I is 14 July 2022. Performance is shown for information purposes only. Past Performance is not a reliable indicator of future performance.
This material has been prepared by Challenger Investment Solutions Management Pty Ltd (‘CISM’) (ABN 63 130 035 353, AFSL 487354). CISM is the holder of an Australian financial services licence and is regulated under the laws of Australia.
This document does not relate to any financial or investment product and does not constitute or form part of any offer to sell, or any solicitation of any offer to subscribe or interests and the information provided is intended to be general in nature only. This should not form the basis of, or be relied upon for the purpose of, any investment decision. This document is not available to retail investors as defined under local laws.
This document has been prepared without taking into account any person's objectives, financial situation or needs. Any person receiving the information in this document should consider the appropriateness of the information, in light of their own objectives, financial situation or needs before acting. Past performance is not a reliable indicator of future performance.
This document is provided to you on the basis that it should not be relied upon for any purpose other than information and discussion. The document has not been independently verified. No reliance may be placed for any purpose on the document or its accuracy, fairness, correctness, or completeness. Neither CISM nor any of its related bodies corporates, associates and employees shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of the document or otherwise in connection with the presentation.
The Strategy is not authorised under Section 104 of the Securities and Futures Ordinance of Hong Kong by the Securities and Futures Commission of Hong Kong. Accordingly, the distribution of this Report, and the placement of interests in Hong Kong, is restricted. This Report may only be distributed, circulated or issued to persons who are professional investors under the Securities and Futures Ordinance and any rules made under that Ordinance or as otherwise permitted by the Securities and Futures Ordinance.
This document does not contain or constitute, and should not be construed as, an offer to sell or the solicitation of an offer to buy securities in the United States. The Strategy and securities referred to herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or any U.S. state securities law. The Strategy and securities may not be offered or sold within the United States or to, or for the account or benefit of, any U.S. Person (as such terms are defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Any failure to comply with these restrictions is a violation of U.S. federal or applicable state securities laws. The Strategy and securities have not been recommended by, and this document has not been filed or registered with, any United States federal or state securities commission, including, but not limited to, the United States Securities and Exchange Commission or any United States or other statutory or regulatory authority. Furthermore, the foregoing authorities have not passed upon the merits, confirmed the accuracy or determined the adequacy of this document or the information contained herein. Any representation to the contrary is a criminal offence.