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Enhanced Investment Technologies has been awarded a A$476 million ($386 million) global core equity mandate by Sydney-based ipac Portfolio Management, one of AustraliaÆs largest multi-management and financial planning firms. The awarding of the mandate comes after Janus Capital Asia, which is responsible for the Australian market, opened its office in Melbourne last year.
Enhanced Investment Technologies will manage a global equities strategy, benchmarked against the MSCI World Index ex-Australia. The firm will draw from securities in the index to create a portfolio that will attempt to outperform the benchmark with equal or less risk. This represents the first foray for the firm into an ex-Australian mandate and it is also the first time it will create a portfolio excluding stocks from a particular country.
By capitalising on the natural price movement of individual stocks, portfolios of Enhanced Investment Technologies seek to offer better upside potential than the market with less relative risk. The firm has been using this process to manage money for institutional investors since 1987.
David Schofield, president of Enhanced Investment Technologies, hopes that winning the mandate from ipac Portfolio Management will open the way to more global as well as Europe, Australasia, and Far East (EAFE) and US risk-managed equity mandates from Australasian institutions.
Created by Robert Fernholz, CIO of Enhanced Investment Technologies, the firmÆs proprietary investment process relies on a precise mathematical methodology rather than fundamental analysis of companies. The firm begins by identifying target weights for individual stocks in the portfolio with high relative volatility to the benchmark and low correlation to each other. With those characteristics, the firm builds a portfolio of stocks, within specific risk constraints, designed to take advantage of the natural volatility of stock price movement. The result is a portfolio of stocks that seeks to produce an overall return greater than the benchmark index, but with less relative risk. This structured process is aimed at resulting in virtually no style drift.
As of end-June, Janus Capital Group managed around $192 billion in assets while Enhanced Investment Technologies managed around $61.3 billion in assets.
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