Deputy CIO explains how evidence-based investing can drive better achievement of outcomes
When Q Wealth Partners looks to design a new investment strategy, they set their sights on an outcome and research the best way to get there. Alfred Lee, Deputy Chief Investment Officer and Executive Partner at Q Wealth Partners, explains that this approach called “evidence-based investing” leans on the wealth of financial academic literature that has accreted over the past several decades. That research and evidence can be collected, collated, and compared to offer investment managers a path to achieving their stated outcome. It’s an approach that Lee says has allowed Q Wealth Partners to stand out in a crowded field.
Lee explained how evidence-based investing has been integrated into Q Wealth Partners’ overall investment management strategy. He outlined how it’s been explained to clients and where he and his team have found it to be particularly effective. He explained how they manage the considerable amount of research required to execute this approach and highlighted where Q Wealth Partners will still look externally for capabilities and expertise.
“For example, when we build a dividend fund, we’ll look for what financial academic literature tells us about the metrics that work for dividend investing,” Lee says. “There are a lot more research resources and published papers now, so we’ll feed a lot of that research through AI to distil and summarize that research for us. We also have a lot of coders on our side of the business to build out the strategies. What that allows us to do is break down certain metrics identified by academic literature to assess whether they have any real merit. We can then score those metrics and use that coding to see how they work together. Evidence-based investing uses those proof points to build the portfolio.”
How to view financial history in an evidence-based approach
Lee stresses that historical financial data and analysis needs to be understood in the context of its particular economic and monetary conditions. He says that using the Bloomberg tool BQuant, his team can look at how different metrics perform during different investment climates and regimes. The vast and growing wealth of research conducted on financial performance in these different regimes can be instructive.
Lee also emphasized that a view of historical performance in the context of its times is helpful now, as after the COVID-19 pandemic and post-pandemic inflation, the world has returned to far more ‘normal’ monetary conditions of higher rates and higher inflation than existed for the period following the great financial crisis.
Access and advantages
As things currently stand, Q Wealth Partners are making their evidence-based strategies available to their advisors alone. Lee says that the firm may expand into publicly available ETFs at some point, but that they want to use their internal capabilities to build performance and track records for these strategies. He notes that by keeping the strategies in house, any fees earned by the funds can be reinvested into the technology underpinning them and in the talent of the people who manage these strategies.
Lee believes that an evidence-based approach works best for public market strategies, both equity and fixed income. Private markets, he notes, tend to lack the wealth of easily accessible and historical data that this approach necessitates. He says, though, that an evidence-based approach can function as a real alpha driver, saying that The Q Wealth Factor iQ Canadian Dividend Fund, since its inception in late January of 2025, would have been ranked #1 in Morningstar's Canadian dividend category, if it were publicly available. While those outperformance metrics can be impressive, Lee says that the real goal is to pursue specific outcomes, be that outperformance, lower volatility, dividend growth, or whatever else the client base requires.
“We’re actually trying to stay away from performance. I know the industry is built upon performance chasing,” Lee says. “We’re taking more of an institutional approach where it’s more so about delivering your objective.”
What the approach gives Q Wealth’s advisors
Beyond what he sees as advantages in the achievement of stated investment goals, Lee also notes that building these capabilities in house allows for collaboration with advisors. The investment management team can work with advisors to find the right combination of evidence-based strategies that suit their clients’ needs.
That doesn’t mean every strategy Q Wealth uses will be built in house. For areas where they don’t currently have internal expertise, Lee says they will go to external active managers, assessing their quality with a similar data and evidence driven approach. Those external managers are normally brought on to manage pooled assets, which can provide more favourable pricing for Q Wealth and its clients.
The evidence-based approach that Lee espouses underpins how the firm wants to grow. Lee says that Q Wealth Partners’ goal is to focus on achieving client outcomes, knowing that the assets will flow from there.
“For a lot of fund managers, their number one priority is chasing assets. We’re taking a long route. We want to put the client first and we want to come up with funds that makes sense for the end client. Articulate how they help them achieve their objective, and then that translates to assets,” Lee says. “I think we’ve done a pretty good job so far in the last two years.”
