Known for equity strategies, Acadian has been building out its systematic credit initiative led by Scott Richardson; he joined the firm in 2022 after stretches at AQR Capital Management and BlackRock. Richardson authored the book “Systematic Fixed Income: An Investor’s Guide.”
Systematic credit, as Acadian defines it, is a structured and data-driven approach to fundamental investing in corporate bonds. The firm's strategy has capability for investment-grade and high-yield corporate credit across developed markets.
After an infrastructure build-out, Acadian launched its first systematic credit strategy focused on U.S. high yield late last year.
“It’s very much an extension, philosophically, of how we think about investing, and being able to apply and extend those principles from the equity side into credit,” Young said. “And I think, the industry itself is still pretty fledgling.”
Young predicts that in the coming three to five years there will be a pickup in investor interest in systematic credit. Acadian declined to say how much they manage in systematic credit. Acadian reported 0.02% of its AUM in fixed income, another 2.2% in hedge funds and the remainder in equity as of Dec. 31, according to Pensions & Investments' latest money manager survey.
Acadian invests in public credit and Young said the firm’s build-out in systematic credit over the coming years will not include private credit.
“I’ve had a couple of people ask me if we would think about moving into private credit. And my view was, if you wanted to be successful in that, you probably needed to be building that business three to five years ago,” she said.
Young said any other new areas of growth in the future would be focused on finding a philosophical fit and internally building and identifying the right person to lead an effort, just like the systematic credit build.
BrightSphere Investment Group, Acadian’s parent company, has helped seed new strategies, Young said.
A 'human in the loop'
As a quant manager, Acadian has been using machine learning techniques in its investment process for over a decade. The firm doesn’t have a head of artificial intelligence and Young said she thinks AI offers potential, but it is yet unknown exactly what that will be.
“You're not going to remove the human in the loop,” she said.
Young believes people are ready to embrace AI and it is hard to think of anything post-internet as pivotal as AI, but it’s unclear to her how many in the asset management industry are using it.
“I’m not sure the solutions are actually there yet that can be used today that makes those kind of productivity gains as obvious,” she said. “I think they’ll come, but we’re 12, 18, 24 months away. And not just for asset management firms, but for a lot of vendors and service firms that support us.”
Acadian is exploring buy vs. build with AI tools. “If you’re going to get efficiency gains out of it, you have to be very clear about what are you trying to achieve, and can you achieve that with one platform or one system?” she said.
ESG signals
Acadian uses environmental, social and governance signals in its investment models because those are accretive to returns, Young said. She said the firm holds ESG signals to the same research and testing standards as any non-ESG factor.
“They’re not in there because we’re making any kind of moral judgment or view around or try and take into account client perspective on things. It’s simply a case of, we believe that in the current construct of our model, this will add value,” she said.
For clients that do want to express an ESG view, the quant process can be customized whether for decarbonization or expressing views on restricted lists, Young said.
Young monitors the political situation around ESG but said that ultimately it is not her place to make any judgment about an investor's views on ESG.
“I always say my job is not to try and make a moral judgment about how someone wants to ultimately run their money for their end retirees,” she said. “That’s for them to determine, what, how they prioritize those relative aspects of returns, ESG, whatever else it might be in the portfolio.”
Culture and the workplace
Young says a focus on firm culture, especially across age ranges, is one of her goals as CEO. She introduced monthly CEO drop-in hours where people can come and ask her questions in an informal setting.
She’s also focused on socioeconomic diversity. Young was raised in London by parents who worked blue-collar jobs and was the first person in her family to go to college.
As Acadian’s first female CEO, Young is cognizant of the imbalance in asset management, particularly the quantitative space, and thinks a lot about how to support and retain women.
Acadian introduced a mentoring program last year, has an active women’s forum and aims to get to 50/50 parity with its intern classes, Young said. Having women present during the interview process is also key — “it makes a real difference to actually see a woman in a position of leadership,” she said.
Women may need more flexibility in the years around big life events like having children, she said.
“A hybrid work environment helps support that. Flexible work helps support that. I’m very much a believer of people spending some time in the office and collaborating, but I always say I’ve got a brilliant team, and I trust them, and they are very effective … whether they’re in the office or whether they’re working from home,” she said, adding, “I also find that some of the most efficient people I've ever worked with have been mums with young children.”
Acadian’s policy is currently three days a week in the office, Young said, adding “being at the slightly more flexible end is actually a huge, huge benefit in terms of attracting and retaining talent.”
And Young emphasizes that for the industry to make headway and change statistics, asset managers need to focus on attracting young women. “If someone hires a senior woman from you, that isn't really changing the dynamics. You're just moving pieces around the chessboard,” she said.
