Approach
Our approach is coined by an unbiased and critical perspective. We focus on finding and addressing the weak spots to achieve an early exclusion of a strategy or manager.
We select funds, strategies, and managers according to a comprehensive proprietary catalogue of criteria. The starting point is the search specified by the investors. Also, we analyze funds/managers that are have already been bought into the portfolio or which are shortlisted.
The utilization of negative criteria, as the first step in the search for or the analysis of strategies, is one distinguishing feature of QAP’s selection process. The objective is to save the scarcest resource – namely the time budget of the specialist – for in-depth understanding of the most promising managers and strategies.
We put a lot of emphasis on operational criteria as well as on alignment of interest between manager and investors.
Blog post: Better Alignment of Interests through Risk-Adjusted Performance Fees
Independence
QAP is independent from financial service companies and holds no shares in external financial market companies.
We do not receive any sales commissions or other remuneration from fund, ETF or other product providers. We are committed to our clients, not to any other party. Conflicts of interest are prevented and with a long-term perspective in mind, we strive to have incentive and interest alignment with our clients. We are happy to give sufficient transparency.
Proprietary Database on Investment Strategies
To be able to select the best strategy and manager, we collect data and have built our own data collection service Fund-Analytics.com. The service allows asset managers and strategy developers of any asset class (liquid and non-liquid) to send all relevant data on their investment strategies regularly or just once. For these suppliers, the process is very simple and efficient because everything can be send by e-mail.
Beside the internet as one public source, the commonly used database of third parties, and a broad network of people in the asset management industry, we create an internal source of otherwise not easily accessible data on investment strategies.
This full view is for the benefit of professional and institutional investors who either look for causally independent, low correlated risk return profiles, can invest with lesser restrictions, can invest globally, or manage asset volumes large enough to control operational risk (e.g. in managed accounts) themselves.
For investors that search for talents (early stage, emerging managers) we provide significant support through the information from the database in combination with our analytics.
With the 360 view on strategies of one asset class – across domicile and vehicle structure – a new option for benchmarking and extension of peer group is created.
Passive Strategies
Passive, rules-based and therefore transparent strategies, such as those implemented in ETFs, can be selected out of one universe with active funds. Passive strategies serve a second purpose and can be utilized for comparison with active strategies that usually come with higher explicit and implicit costs.
Buying expensive strategies which can be replicated with passive factors should be prevented when selecting managers. In case, the group of ETFs and commonly known factor time series (value, momentum, small cap) is not enough to review an active strategy for factor dependencies, we create custom factor strategies. The calculation of time series takes place in-house due to QAP BLIS, our proprietary bookkeeping logic for investment strategies.
Hedge Funds & Alternative Investments
The most common method of fund and ETF selection results from comparing these structures within one regulation (e.g. UCITS). We incorporate more vehicle structures, if the client has no contradicting restrictions.
Considering opacity, lag of liquidity, and other factors that need adjustments to adequately compare strategies across vehicle structures, we cover hedge funds, other alternative strategies and even strategies that have only been simulated, for one selection.
External Partners
QAP follows an „In-House First“ approach. Nonetheless, for certain niche topics, we partner with outside entities. Legal and compliance as well as forensic accounting are two areas where we work together with external specialists.