Farouk Jivraj - The Art & Science of Using Alternative Risk Premia (S7E12)

Hey, everyone. Corey here. Thanks for tuning in to another episode of Flirting With Models. If you're enjoying the show, I'd greatly appreciate it if you take a moment to rate, review, and most importantly, share with a friend. Word-of-mouth is how this podcast grows. And if you'd like to learn more about Newfound's platform of return stacked mutual funds, ETFs, and model portfolios, head over to return stacks.com. Now on with the show. 321. Let's jam. Hello and welcome everyone. I'm Corey Hofstein and this is Flirting with Models, the podcast that pulls back the curtain to discover the human

Hofstien is

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In this episode, I speak with Farooq Jhaveraj, portfolio manager and head of alternative risk premia at Fidelity Investments Asset Management Solutions division. After spending nearly a decade on the sell side, Farooq joined Fidelity in 2021 with the goal of building out an alternative risk premium platform, tapping into the best of what both the sell side QIS desk have to offer and what can be built in house. We spend the majority of the conversation peeling apart the layers of Farooq's 5 step process for implementing alternative risk premia strategies. He shares his thoughts on how to classi

too. Thanks for having me, Corey. Let's finally get into it. So

I wanted to start with a question that gives you a little bit of a different way of introducing yourself and your background. You joined Fidelity Investments a little over 3 years ago to help build out the alternative risk premia portfolio capabilities and offerings, and I was hoping you could talk me through how your prior experience at QIS desks on the sell side informed what ideas, concepts, and processes you wanted to keep and what you wanted to throw away when you got started at Fidelity.

So, well, that's a pretty big and potentially very leading first question. But before I dig into that, let me start by saying thanks for inviting me onto your series. I'm an avid listener, all of the podcasts that you put out, and I think you're doing a great service for the investing community. So thank you on behalf of the membership. And it's great that we have some things like this to demystify all things quant. So, yeah, looking forward to this session. As you mentioned, I joined Fidelity in mid 2021 to help with the build out of the ARP, so alternative risk premium platform. For those li

There's a lot to dig into there from research to selection to portfolio construction and ongoing management. But before we dive in, I wanna do a little bit of table setting with just asking what is the core objective here from the alternative risk premia offering at Fidelity? Who's it available to? What's the end goal of the offering?

Alternative risk premia is this kinda source of returns that we feel attractive and durable and provide compensation for bearing some form of risk, whether it be structural or behavioral. And, ultimately, it's the use of quantitative rules based investment strategies to reap these premiers. So the objective of the risk premia platform is eff