Intech plans to focus on maximising performance, and will not be concerned with minimising short-term volatility, achieving a neutralised investment style or considering market cap and other factors with its newly launched multi-manager Australian shares product.
Intech Senior portfolio manager Ralph Morton said the Intech Australian Shares High Alpha Trust (HAT) was “not for the faint hearted”.
“It’s a high performance, high alpha expectation whether the market’s up or the market’s down, so if you are going to have money in Australian equities, you have a long time horizon and you do want out-performance — this is the one,” he said.
Morton said the fund would be not be suitable for investments of less than three to five years.
Intech chief investment officer Ron Liling added the trust should not be considered for clients concerned with short-term underperformance.
Liling said the HAT would have a much higher tracking error than other multi-managers in Australian shares, with levels of 3 to 4 per cent to be expected. The December 2005 Chant West multi-manager survey estimated the median tracking error for multi-managers in Australian shares to be 1.2 per cent per annum.
Liling said the trust would use the company’s research into the characteristics of alpha-generating managers and aimed to achieve higher returns than mainstream Australian shares multi-manager products over the longer term.
Herschel, Highbridge, Lazard and Quest have been chosen to manage assets for the fund.
“Manager mandates have been deliberately designed to allow managers the freedom of conviction to take uninhibited and significant positions against benchmark,” Liling said.
The fund is currently open only to wholesale investors but Morton said discussions were underway with Intech’s current wrap providers to have the fund included on their platforms.
Liling said the portfolio currently has around 60 stocks; substantially less than typical multi-manager products, which tend to hold around 150 stocks. It has been seeded with over $100 million invested by two of Intech’s existing clients.
