Global private market exchange ADDX has listed a deep-value equity fund, managed by Aggregate Asset Management (AAM), that uses machine learning to optimise investment strategy and returns.
The fund is invested in more than 1,300 listed companies across 17 countries and targets a compound annual growth rate of 8% and is open-ended. An ADDX-exclusive share class, which was launched and made available to investors at a minimum ticket size of $10,000, does not charge any performance fees and has waived management fees for the first two years.
Investors who subscribe directly via AAM typically have to invest a minimum of $100,000 and be subject to varying management and performance fees.
AAM was founded in 2012 by three veterans in the financial services industry with a mission to deliver steady investment results to meet investors’ goals of retirement, wealth preservation or leaving a legacy for future generations. All three founders are personally invested in the fund — they contributed capital at startup and have also reinvested their returns into the fund.
AAM is chaired by Singaporean diplomat and geopolitical analyst Professor Kishore Mahbubani, who formerly served as Singapore’s Permanent Representative to the United Nations and President of the United Nations Security Council. AAM’s fund management team says it taps Mahbubani’s geopolitical expertise when evaluating investment opportunities.
According to Mahbubani, he believes in the management team’s capabilities and the long-term performance prospects of the fund, as well as investing in the untapped opportunities across Asia’s high-growth emerging markets.
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Incepted in 2012, the Aggregate Value Fund’s strategy of acquiring stocks at a discounted price has delivered a compound annual growth rate of 6.1%. In 2021, its fund managers began using artificial intelligence (AI) technology to enhance its stock-picking methodology by evaluating 150 factors — 50 fundamental indicators, 50 technical indicators and 50 financial journal indicators — that influence the performance of company shares.
“Since the adoption of AI in managing AVF three years ago, we have beaten our benchmark, the MSCI AC Asia Pacific index, by 35%,” says AAM founder and executive director Eric Kong. “Despite such sterling results, our human analysts are still in charge of performing qualitative checks on every stock the AI picks. Our AI will always be an enhancement, not a replacement, of our analytical process.”
The fund is invested in over 1,300 stocks listed in 17 countries including Singapore, Hong Kong, Japan, the United States and Germany.
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In December last year, the fund managers embarked on a year-long challenge, documented in The Edge's monthly column Man vs Machine, that pitted 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 was rebalanced once a month for 12 months, with the purchase price of each stock and the portfolio valuation published in the Man vs Machine column. The portfolio started with an investment of US$500,000 ($710,510). Berkshire Hathaway won the battle 4 with a return of 26.12%, while Deep Deep came in second with a return of 21.43%. Deep Deep beat all the indexes after factoring in relevant transaction costs and dividends.
ADDX CEO Oi-Yee Choo notes that in the world of equity investing, value and growth stocks represent “two distinct approaches” to unlocking potential for substantial returns. “Value stocks offer the promise of steady, consistent growth as they recover from their perceived undervaluation, while growth stocks captivate investors with their potential for explosive growth and market dominance — though this often comes with higher risk and volatility.”
She believes AAM’s deep-value equity fund strikes a balance between these two approaches. “The fund’s AI-powered strategy uses sophisticated pattern recognition algorithms to seek out companies trading at relatively cheap valuations compared to their earnings and long-term growth prospects, which allows the fund managers to uncover hidden gems in the market and capitalise on mispricing anomalies that may not be readily apparent to traditional investment methods,” says Choo.
ADDX is a global private market exchange headquartered in Singapore. The company hopes to make investing fairer by democratising private markets. Using blockchain and smart contract technology, ADDX reduces manual interventions in the issuance, custody and distribution of private market products.
The resulting efficiency from the use of digital securities allows the platform to fractionalise investments in a scalable and commercially viable manner, bringing minimum investment sizes down from US$1 million to as low as US$1,000, thereby widening investor access to private markets.
To date, ADDX has listed more than 80 deals on its platform and worked with blue-chip names such as Hamilton Lane, Partners Group, Investcorp, Singtel, UOB and CGS-CIMB, as well as Temasek-owned entities Mapletree, Azalea, SeaTown and Fullerton Fund Management. Asset classes available on ADDX include private equity, hedge funds, venture capital, private credit, real estate, debt and structured products.
