JAM Systematic - World Sectors

JAM Systematic – World Sectors -fund offers an advanced and efficient way to invest into the global equity markets.

In the current global competitive landscape the growth and success of international firms depend more than ever on global economic trends. As the result of globalization, equity markets have become very interlinked and regional diversification doesn’t provide the most efficient way to diversify one’s equity risk any more. A better risk/return-ratio can be attained by investing into the sectors that benefit of the prevailing market and economic conditions as opposed to allocating the investments into broad regional areas.

The investment strategy of the fund is based on an algorithm designed by JAM Advisors that aims to select the global industry sectors with most return potential in the future. Our model is backed by strong scientific research and our ability to handle Big Data efficiently.

The algorithm aims to systematically identify the global trends and their strengths for different time periods. Based on these trends the model selects those five sectors of the MSCI World index that possess the best potential for continuing excess returns.

During declining markets, the algorithm seeks to invest into sectors that are defensive by nature and thus participate less in the market decline.

Systematic portfolio management

One of the main benefits of systematic portfolio management is the objectivity of the decision making. Algorithms can process large quantities of information and act logically based on the derived results.

Being systematic and analyzing big data efficiently allows for prompt reacting to changing market conditions. With the help of the algorithm short term market noise is disregarded and only more meaningful changes are taken into consideration.

The fund invests into global sector ETFs and index funds that meet the set qualitative criteria, such as low total expense ratios and efficient trading.

The impact of sector allocation for the investor

The most widely used global equity benchmark (MSCI World) comprises of 11 industry sectors. The weighted return of these sector indices adds up to the return of the world index.

In practice some of the sector indices must have a return lower and some higher than the world index!

The algorithm selects those five sectors with the best expected returns and allocates all assets into them. On average, only five sectors have outperformed the world index on an annual basis, whereas six sectors have underperformed on average against it.

By successfully selecting more of the better performing sectors and at the same time by avoiding the worst sectors, outperformance can be generated against the market.

More information about the fund (KIID, fond prospectus, rules, subscription form) can be found in Finnish at gritfundservices.fi/jamadvisors