Spotlight on Michael Heldmann, Chief Investment Officer Systematic Equity, Allianz Global Investors
Global Thought Leader Spotlight
Michael Heldmann, Chief Investment Officer Systematic Equity, Allianz Global Investors
“In my role as Chief Investment Officer of the Systematic Equity team at Allianz Global Investors I am responsible for the Systematic Equity strategies and overseeing approximately AU$64 billion in assets under management. I have the pleasure of leading and working with a highly capable team of investment professionals with diverse backgrounds in academia, hard sciences, traditional financial analysis and portfolio management. We are a dedicated group of multi-factor investing experts. Our flagship strategy, Best Styles, was launched in 1999 and has been successfully implemented for more than 20 years. The Best Styles strategy centres upon the conviction that investment styles, like value or momentum, carry risk premiums that can be harvested in a disciplined systematic approach, largely independent from the economic or the market environment. This philosophy underpins all our thinking and investment decisions.
“In 2022 a long period of low yields came to an end as central banks started to hike interest rates. The low yield environment created headwinds for factor investing and contributed to the so-called ‘factor winter’ from 2018 to 2020 which this investment approach underperformed for an extended period of time.
“With the end of the low interest rate regime the market is pricing factor exposure, such as Value, Momentum, or Quality, much more accurately. Factor investing has started to provide investors with the returns which they are due, because of the risk exposure they represent. As such we believe that we are entering a much more accommodative period for factor investing and expect factor exposures to drive outperformance.
“Sustainability is another key development that has left its mark on the investment industry over the past few years with significant inflows into ever more products. Given the huge number of thematic products it is easy to forget the needs of benchmark-oriented investors who invest with clear return objectives and risk targets in mind, an important client group for us.
“Another key development is the rise of AI, an area that systematic equity investors have been active in for some time. But there have been tremendous advances in the technology and applications around AI over the past few years and taking advantage of that will be a key challenge but also an opportunity for investors fundamental and systematic alike.
“Since the factor winter some investors have grown sceptical about factor investing. However, it is unlikely that in the next 5 years equity markets will behave as they did in the past 5 years. And the nature of risk premia is that they cannot be arbitraged away and eventually will be rewarded when the market is able to price these risks correctly. We may be entering such a market phase following the steep rise in interest rates.
“At the same time the macroeconomic environment is facing challenges due to ‘sticky’ higher inflation and slower, below-trend growth or even recession. This creates uncertainty and volatility in equity markets which also leads to greater volatility of factor returns. To counter this relative return volatility, we believe that factor diversification is key to successful management of an active systematic strategy. And rigorous risk-management will also be essential to generate excess returns independent of the point in the economic cycle.
“As timing the market is difficult and forecasting the low point nearly impossible, most investors should stay invested if they don’t want to miss the start of an upswing. We think there are different ways to maintain equity exposure and that diversification, across geographies and sectors as well as investment styles, and the management of macro risks are important. Systematic equity strategies are ideally placed to meet these requirements.”
Michael will be presenting at Global Investment Institute’s upcoming Equities Investment Forum, taking place on Wednesday, 6 September 2023 at the Westin Melbourne, Victoria.
To register your interest in attending, click here or for more information email zlatan.kapetanovic@globalii.com.au.
Michael Heldmann, Chief Investment Officer Systematic Equity, Allianz Global Investors
Dr. Michael Heldmann is the CIO of the Systematic Equity team, overseeing approximately AU$64 billion in assets under management (as of April 2023). Prior to being named CIO of the overall Systematic Equity platform, he was CIO Systematic Equity US and based on San Francisco. Previously, he also managed Best Styles Emerging Markets and Best Styles Europe Equity products. Before joining the Systematic Equity team, he worked for the international laboratory CERN, Geneva, Switzerland as a researcher in the field of particle physics.
He obtained a master’s degree in Physics from the University of Mainz, Germany and a PhD from the University of Freiburg, Germany. He is a CFA charterholder.
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