Investment manager Federated Hermes has launched the Ucits version of its US-domiciled quantitative equity strategy for European investors.
The actively managed offering, the Federated Hermes MDT US Equity Fund, selects stocks from the Russell 3000 Index and applies AI-driven modelling tools that incorporate machine learning to assess forecasts for portfolio construction.
The Undertakings for Collective Investment in Transferable Securities fund or Ucits fund, is a type of mutual fund that complies with European Commission regulations for funds that are sold throughout European Union nations ( Investopedia).
The fund will make use of MDT’s bottom-up quantitative approach and follow an all-cap, all-style approach. It benchmarks against the Russell 3000 index, which represents approximately 98% of the US domestic equity market.
The fund is managed by Daniel Mahr, head of MDT Group, the active quantitative equity arm of Federated Hermes, and supported by Frederick Konopka, John Paul Lewicke and Damien Zhang.
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The fund is registered for sale in the UK, with additional registrations across Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, and Singapore expected to follow.
According to the provider, the strategy has outperformed both the Russell 3000 and S&P 500 over multiple periods with relatively low exposure to the “Magnificent Seven” stocks.
The Dublin-domiciled fund is classified as an Article 8 fund under the EU’s Sustainable Finance Disclosure Regulation, promoting environmental and social characteristics without having sustainability as its core objective.
Mahr commented: “The MDT US Equity fund is a fund for all seasons. Our long-term returns demonstrate it’s not the direction of the benchmark that matters, as the strategy has proved to be robust in different market environments. Our strategies hold many different companies and company types, helping to diversify its alpha sources and provide additional diversification through the cycle when one particular factor or type of company is out of favour.”
Clive Selman, head of international sales at Federated Hermes Limited, shared: “Our MDT strategies take a supervised, yet disciplined approach that resonates with our client base. MDT has a lengthy track record deploying a differentiated machine learning model, which has been able to deliver a repeatable process to the financial benefit of our clients. We are excited to provide international investors exposure to the US equities markets through these award-winning strategies.”
