Intech Investment Management, a unit of Janus Capital, has been appointed as a sub-advisor by Nikko Asset Management to provide a customised international Kokusai global ex-Japan equity strategy to Japanese pension funds for the first time.
The MSCI Kokusai World ex-Japan Index is the international equity benchmark used by the majority of Japanese pension funds for their international equity investments.
Intech, which is independently run, uses a mathematical investment process whereby all stock decisions are the result of a proprietary mathematical algorithm. The investment process is driven by the mathematical theory that by combining stocks with high relative volatility but low correlations, it's possible to deliver above-index returns while retaining index-like levels of risk.
"Japan is one of the world's largest and most sophisticated asset management markets and a key area of growth for our business," says Jack Lin, Hong Kong-based co-CEO of Janus Capital International. "We believe that it is essential to customise asset management services to the needs of customers in each country and region."
Intech will implement the strategy using the MSCI Kokusai World ex-Japan Index as a benchmark. The index consists of more than 1,200 stocks in 22 countries outside Japan and represents approximately 85% of the total market capitalisation in those countries.
The Intech strategy seeks to achieve an annual excess return of 2.5% to 3.0% with an annual tracking error of 3% to 3.75%, both gross of fees. Intech already provides the Intech Global Core Strategy to Japanese pension funds through Nikko Asset Management. This strategy has provided an annual excess return of 3.07% from its inception on January 1, 2005 through March 31, 2009 gross of fees, according to Intech.