Global private market exchange ADDX has recently collaborated with Aggregate Asset Management (AAM) to introduce a deep-value equity fund. AAM, chaired by distinguished Singaporean diplomat Kishore Mahbubani, leverages machine learning for investment optimization, and the fund is designed to target a compound annual growth rate of 8%. What sets this offering apart is the ADDX-exclusive share class, made accessible to investors with a minimum commitment of S$10,000. Notably, this share class boasts a unique proposition, featuring 0% performance and management fees for the initial two years, making it an attractive option for discerning investors.
AAM, founded in 2012, manages the Aggregate Value Fund, which has adopted a strategy of acquiring stocks at discounted prices. Over the years, this approach has delivered a commendable compound annual growth rate of 6.1%. In a bid to enhance their stock-picking methodology, the fund managers at AAM incorporated artificial intelligence (AI) technology in 2021. The AI evaluates a comprehensive set of factors—150 to be exact, including 50 fundamental indicators, 50 technical indicators, and 50 financial journal indicators. This exhaustive evaluation aims to influence the performance of company shares listed in over 1,300 stocks across 17 countries, including significant markets like Singapore, Hong Kong, Japan, the United States, and Germany.
Kishore Mahbubani, a luminary in the diplomatic realm who served as Singapore’s Permanent Representative to the United Nations and President of the United Nations Security Council, lends his geopolitical expertise to the fund management team. He believes in the capabilities of the management team and the long-term performance prospects of the fund, particularly in tapping into untapped opportunities across Asia's high-growth emerging markets.
The ADDX-exclusive share class represents a unique opportunity for investors looking to enter the deep-value equity fund arena. The absence of performance and management fees for the first two years provides an additional incentive for investors to explore this offering. In contrast, investors who subscribe directly are typically required to invest a minimum of S$100,000 and are subject to various management and performance fees.
As part of its commitment to transparency and innovation, AAM's fund managers engage in a monthly column titled "Man VS Machine" in the regional business publication The Edge. This column details a year-long challenge that pits AAM's AI-powered 15-stock portfolio, Deep Deep, against benchmarks such as Warren Buffett’s Berkshire Hathaway stock price, Dow Jones Industrial Index, MSCI All Country World Index (MSCI ACWI), and MSCI All Country Asia Pacific Index (MSCI AC APAC). The Deep Deep portfolio, rebalanced monthly for 12 months, delivered a return of 21.43%, securing second place behind Berkshire Hathaway's return of 26.12%.
Eric Kong, Founder and Executive Director of AAM, emphasized the complementary role of AI in their investment strategy. Despite the impressive 35% outperformance against the benchmark MSCI AC Asia Pacific index since the adoption of AI, human analysts continue to play a crucial role in qualitative checks on every stock the AI selects. The hybrid approach of integrating AI as an enhancement rather than a replacement underscores AAM's commitment to maintaining the human touch in the analytical process.
In the world of equity investing, the AAM deep-value equity fund is positioned uniquely, striking a balance between value and growth stock approaches. According to Oi-Yee Choo, CEO of ADDX, the fund's AI-powered strategy utilizes sophisticated pattern recognition algorithms to identify companies trading at relatively cheap valuations compared to their earnings and long-term growth prospects. This approach allows fund managers to uncover hidden gems in the market and capitalize on mispricing anomalies that may not be readily apparent to traditional investment methods.
As the financial landscape evolves, with data-driven strategies and artificial intelligence taking center stage, ADDX positions itself as a key player in this technological revolution in investing. The platform, headquartered in Singapore, aims to democratize private markets through the use of blockchain and smart contract technology. By reducing manual interventions in the issuance, custody, and distribution of private market products, ADDX facilitates fractionalized investments in a scalable and commercially viable manner. This, in turn, brings down minimum investment sizes from US$1 million to as low as US$1,000, widening investor access to private markets.
Since its inception, ADDX has listed more than 80 deals on its platform, collaborating with renowned names such as Hamilton Lane, Partners Group, Investcorp, Singtel, UOB, CGS-CIMB, and Temasek-owned entities like Mapletree, Azalea, Seatown, and Fullerton Fund Management. The range of asset classes available on ADDX includes private equity, hedge funds, venture capital, private credit, real estate, debt, and structured products.
In conclusion, the partnership between ADDX and AAM, as reflected in the listing of the deep-value equity fund, represents a significant step in making innovative investment strategies accessible to a broader investor base. The fusion of AI-driven approaches and traditional expertise, combined with the unique features of the ADDX-exclusive share class, positions this offering as a noteworthy development in the evolving landscape of private market investments. As both companies continue to push the boundaries of what is possible in the financial markets, investors stand to benefit from the intersection of technology and investment acumen.
