O'Shaughnessy Asset Management is a quantitative money management firm. OSAM has been managing client money since 2007 with team members managing our strategies back to 1996. The Canvas™ platform is our newest client-focused investing solution and service of O’Shaughnessy Asset Management, L.L.C.
The future of investing lives at the intersection of research and technology. Our team has spent decades building both and is turning our systems inside out to give other professionals access to build and implement their own strategies. We will keep improving every aspect of Canvas so your business and your clients' portfolios will, too.
Start with strategy templates built to express your firm’s core investing tenets, then tailor a fingerprint portfolio for each client based on their circumstances and preferences.
Digital paperwork, easy onboarding, and efficient dashboards. Everything is built to be scalable for advisers. Canvas is your investing operating system.
Manage single stock, portfolio, and career risk exposures. Optimize taxes. Adjust holdings for the investors’ values.
Select weights to stocks and bonds, including region and market cap segmentation.
Most factor strategies are watered down and based on generic factor definitions. Our team has spent decades honing and improving factor strategies. Build our core or single factor-focused exposures into your Canvas portfolios.
Choose what percentage of the portfolio to invest in the Russell and MSCI indexes. By investing directly in the underlying positions instead of funds or ETFs, you can harvest tax losses for clients and customize their holdings at the position level.
Control for climate change, deforestation, pollution, water stress, data privacy, diversity, labor rights, corruption, gender diversity, and/or governance structure. Choose only issues relevant to the client and see the impact in real time.
Across every trade, we optimize for the best after-tax results. This includes automatically harvesting tax losses throughout the year. You can even control how aggressive to be in harvesting losses by setting tracking error levels at both the firm and client level.
Never before could you control every direct index, factor strategy, or ESG strategy at the position level. With Canvas you can do it easily and in one spot. Exclude individual stocks, industries, sectors, and other categories.
You select credit and duration risk in a simple 5x5 grid. We then use our optimizer to build a smart fixed income allocation with low cost ETFs.
Diversified Beta at a Low Cost
Access to Cheap Beta
Introduction of tax optimization for clients
Brought simplification and improved operational efficiency to advisers
In 2019, we completed more research than in any prior year, built and launched Canvas, and shared 13 papers and over 50 podcasts. This letter is intened to share where markets stand at year end, and discuss what we built and learned at OSAM during 2019.
References to the 'momentum factor' appear as early as 1913, but the drivers of this factor stretch back even further. Investors focusing on buying quality companies at cheap valuations with strong earnings have benefited from the momentum effect for centuries.
Our analysis of corporate allocation over several decades finds that the most rewarding way to allocate capital is by returning it to shareholders. In fact, investors have recognized this for more than four centuries, and demanded buybacks and dividends as a result.
While they may not have been known by the same names, many modern investment factors have historical roots stretching back centuries. This series, The Factor Archives, provides historical context on the six factor themes underlying OSAM’s investment process.
In order to scale, the largest ESG products are designed to be one size fits all. This approach waters down and often tilts away from the values investors (institutional or individual) want. Poorly defined ESG screens and tilts can lead to starting universes and portfolio holdings that are not aligned with investors’ goals. We believe the best solutions are reached by tailoring portfolios to the unique goals of each investor. This paper discusses best practices in: tailoring ESG screens and tilts, combining ESG with Alpha factors to improve return expectations, and using differences in ESG data providers to solve a wider range of ESG goals.
In this quarter’s letter, Patrick begins by highlighting the most interesting trend we see inside equity markets today, and finishes by sharing the five key lessons that we’ve learned so far after demoing Canvas for more than 100 advisors and other capital allocators.