What does a financial markets executive, a technology leader with 20 years’ experience in IT systems, and a lecturer in finance at The University of Michigan have in common?
Investing! In particular, the stock market.
UQ alumni Richard McDougall (MBA, 2015), Damian Vassallo (MBA, 2007) and Jason Hall (PhD, 2005) co-founded investment advisory startup, Hamilton12, in 2017.
Hamilton12 creates and validates financial algorithms for the investment management industry. The team knows money, and they know how to make yours grow.
So, what is an index and how can multiples of them make life better for you?
A market index (plural: indices) follows a certain market and gives investors a single number to summarise its ups and downs. It allows the world's investors (in retail, institutionally) to track a market sector without having to aggregate the underlying components, such as the Gross Domestic Product (GDP) of a country can tell you how a nation is going and how its markets are performing as a whole.
Hamilton12, after speaking with some of the main actors on the market such as super trustees, and asset consultants, set to create a rules-based index that, when followed, results in higher after-tax returns for investors than a simple market capitalisation weighted basket of all stocks; it also lowers the risk through diversification and not having performance eroded with hefty fees.
In short, Hamilton12 create the recipe and investment managers follow it.
UQ Business School Director of Entrepreneurship & Innovation, Associate Professor Tim Kastelle proved instrumental in the early stages of Hamilton12’s formation through mentoring and guiding the team using the principles of the Lean Startup methodology: a scientific test-update-validate – and repeat – method to ensure building an offering that customers need and want.
“Often when you have a team of this calibre, they have a strong tendency to build first, then launch,” said Mr Kastelle.
“But the Hamilton12 team did a great job of listening first, then building. This greatly improved their product-market fit and opportunities for growth.”
In August this year, Hamilton12 signed a partnership agreement with S&P Dow Jones Indices, a global leader in providing investable and benchmark indices to the financial markets. The signing means that S&P will validate and calculate investable indices created and marketed by Hamilton12. From November, this year, the Hamilton12 Australian Diversified Yield Index is live.
A partnership borne from a collaboration with Daphne van der Oord, Head of Australia and New Zealand at S&P Dow Jones Indices and backed by APAC Lead, Kenny Chan, Head of Custom Indices, Asia Pacific at S&P Dow Jones Indices: “We are pleased to support Hamilton12 in calculating the Hamilton12 Australian Diversified Yield Indices.
“At S&P DJI, we provide a full suite of innovative and flexible custom index solutions and services for our clients, and this latest collaboration highlights our sustained commitment to the region.”
The index aims to provide Australian superannuation industry investors access to a low-cost, rules-based method of investment that mitigates the risk associated with subjective assessment and results in the most tax-effective, diversified selection of stocks for Australian resident investors.
The first series of rules-based indices will not allow decisions to be influenced by short-term distractions or herd mentality.
Next year, Hamilton12 plan on releasing their next investable index in the USA with further intentions of partnering with academia, both domestically and abroad, to provide an avenue for commercialising investment methodologies.
