What bespoke research services do you provide to Smartkarma subscribers?
The main bespoke research service is a weekly update of announced changes and potential inclusions and exclusions to all major Asian indices that have a significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. This also involves commentary on market consultations, ground rule changes, and other changes (IPOs, spin-offs) that could lead to passive flow. Periodic calls with clients that need more information on particular rebalances or stocks are part of the service.
What are your clients’ key use cases?
There are four main types of users:
- trading desks that use the information to actively trade index rebalances and position size based on the probability and impact of the changes
- mid/low frequency stat arb desks that use the information to avoid trading against the active positioning and passive flow
- fundamental investors that use the information to time their entry/exit on stocks with the least market impact
- index arbitrage/ delta one trading desks that have large dividend exposure use the information to build/unwind positions before the changes are announced and the market starts to adjust for it
What types of clients find your work most useful?
All client types can use the information to add alpha to their portfolios. At the moment, the main users include multi-strategy hedge funds and proprietary trading firms. Recently, we have also seen a lot of interest from delta one trading desks at banks and from long-only funds that have positions or are looking to take positions on stocks that are potential inclusions to, or exclusions from, the indices.
What is differentiated about your work versus competitors?
Comprehensive, timely, and systematic coverage of announced and potential changes to the major Asia-Pacific indices presented in a structured manner. The ability to have phone calls at short notice to discuss announced and potential changes is something that is also valued.
What was the gap in the market that led to the establishment of your firm?
With banks pulling back from providing index-related research services and experienced analysts joining the buy-side, there was a void created where there was insufficient research coverage on indices in the Asia Pacific region. Additionally, a lot of buy-side firms prefer unbundling research from execution to achieve the best outcomes.
What has been the trajectory of your career as a research provider?
I started off my career as a systematic trader before moving on to delta one trading. After 15 years with various investment banks in Hong Kong trading index arbitrage and delta one strategies across Asia Pacific, I moved to New Zealand in early 2019 and began my career as a research provider in June that year when I published my first Insight on Smartkarma. Over the last couple of years, I have gradually built up systems and processes to forecast changes on various Asia Pacific indices. The number of indices under coverage has been steadily increasing and existing processes are constantly fine-tuned.
Why do you choose to work with Smartkarma?
The Smartkarma platform is user-friendly and the process of publishing research is streamlined. There are a lot of active users that interact with me, providing feedback and giving me ideas for subsequent Insights. The Insights published by other Research Providers provides a fundamental angle for a lot of the changes that are seen on the index rebalance side.
