Intech’s COVID-19 Response Update Read Now

Please Choose Your Country

Welcome. This website is intended solely for the use of institutional investors, consultants and other professionally recognized financial intermediaries in specific countries. Intech Investment Management LLC (“Intech”), is an investment adviser registered with the United States Securities & Exchange Commission. Intech is not permitted to offer products and services in all countries. It is the responsibility of prospective investors to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdictions, including the legal requirements and tax consequences within the countries of their citizenship, residence, domicile and place of business with respect to the acquisition, holding or disposal of shares or securities, and any foreign exchange restrictions that may be relevant thereto. The products and services referred to in this website are not offered to any person or entity in any jurisdiction where the advertisement, offer or sale of such products and services is restricted or prohibited by law or regulation or where we would be subject to any registration or licensing requirement not currently held by Intech or our affiliates. If Intech does not offer a website for your country, please visit

For U.S. and Canadian Institutional Investors Only

Information contained in this area of the Website is published solely for general informative purposes and intended only for United States and Canadian institutional investors, consultants, financial advisers, and other intermediaries who are who are knowledgeable and experienced in the financial services market and in investment products of this nature. If you are a retail, individual investor or non-ultra-high net worth individual then please leave this website immediately. The information is not authorized for use in a jurisdiction where distribution is not authorized and is not intended for distribution to retail clients, the general public or retail investors. If you choose to access this Website from locations outside of the United States or Canada, you do so at your own initiative and risk, and are responsible for compliance with all applicable laws.

U.S. Institutional Investors: By accessing this site you confirm that you are an U.S. Institutional Investor, you agree not to forward or make the contents of this site available to any person who is not an U.S. Institutional Investor, and you agree to be subject to terms of use.

Canadian Institutional Investors: By accessing this site you confirm that you are a “permitted client” as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations of the Canadian Securities Administrators, you agree not to forward or make the contents of this site available to any person who is not a “permitted client”, and you agree to be subject to terms of use. The information on this Website is for informational purposes only and does not constitute (i) an offer for products or services or (ii) the provision of investment advice of any kind, tailored or otherwise. The information on this Website should also not be construed as an offer to sell or a solicitation of an offer to buy to any persons who are prohibited from receiving such information under the laws applicable to their place of citizenship, domicile or residence. Intech Investment Management LLC (“Intech”) does not have any funds that offer securities under a simplified prospectus for general offer or sale within Canada. No securities regulatory authority in Canada has reviewed or in any way passed upon this website or the merits of any investment available, and any representation to the contrary is an offense. Intech is registered with the United States Securities & Exchange Commission under the Investment Advisers Act of 1940. Intech is a subsidiary of Janus Henderson Group plc, and is affiliated with its subsidiaries and affiliates.

Redirect Me to

Yes, investing can definitely be a drag. How? In short, it’s volatility.

Anyone that has purchased a leveraged ETF can attest to the problem. Leveraged ETFs that seek 2x benchmark returns for a single day can’t deliver it for periods longer than a day (just read their disclaimers). The reason is volatility drag: the detrimental impact volatility has on an investment held over time.

This is a very important, often overlooked, pain point for most investors. Most investors do not invest for a single period; they are long-term investors that prefer to compound returns over time. Yet, most portfolios have some volatility, so this drag effect negatively impacts buy-and-hold investors.

What’s more, portfolios with higher volatility and/or held longer will be subject to more drag. Larger negative fluctuations below a stock’s average arithmetic return simply require higher positive fluctuations to break even. This effect increases dramatically with increasing volatility. A stock with a negative return of 5% requires a positive return of 5.3% to break even; a negative return of 50% requires a 100% positive return.

It is this mathematical reality that fuels defensive equity investing.

Most of the mystery surrounding the “anomaly” of the outperformance of low volatility stocks or defensive equity investing disappears when we relate this drag concept to both security- and portfolio level-returns. For any two return-series – stocks or portfolios – that have the same single-period (arithmetic) return, the one with lower variance provides a greater compound (geometric) return when held over multiple periods.

See How Drag Affects 7% Return Targets

Investing defensively is largely about recognizing and avoiding uncompensated risk. That’s consistent with the economic tenet that states higher return generally requires more risk. Unfortunately, this statement is often flipped to make the false claim that more risk will result in higher return.

The chart below illustrates the point. Pension plans or individual investors with 7% return targets can get there with low or high volatility investments. Portfolio 1 and 2 both have the same 7% buy-and-hold (geometric) return, but portfolio 1 does it with half the volatility – and less arithmetic return!

Arithmetic Return Needed for a 7% Geometric Return at Different Volatility Levels

The math to create this illustration is straightforward: a portfolio’s geometric (compound) return is equal to its arithmetic return minus half its variance (standard deviation squared). In other words, volatility drags down a portfolio’s return by 50% of its variance. The bigger the portfolio variance, the lower the geometric, or compound, return.

Turn Drag Into Delight

What does this mean for investors? It means that portfolios with lower volatility and lower arithmetic returns can match the geometric return of portfolios with higher volatility and higher arithmetic returns. Over the long term, the more reliable way of preserving and growing capital is a steady compounding of returns: win more by losing less.

That’s the essence of defensive equity investing

Learn More

The longest bull market in history, persistently low interest rates and increasing longevity are driving many to take a hard look at defensive equities investing. That’s why we’re offering a fresh look at defensive equity investing: How to Make Equity Allocations More Resilient.

How to Make Equity Allocations More Resilient  A fresh look at defensive equity investing. Download Paper


The information expressed herein is subject to change based on market and other conditions. The views presented are for general informational purposes only and are not intended as investment advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation, or sponsorship of any company, security, advisory service, or fund nor do they purport to address the financial objectives or specific investment needs of any individual reader, investor, or organization. This information should not be used as the sole basis for investment decisions. All content is presented by the date(s) published or indicated only, and may be superseded by subsequent market events or other reasons. Past performance is no guarantee of future results. Investing involves risk, including possible loss of principal and fluctuation of value. Hypothetical performance results presented are for illustrative purposes only. Hypothetical performance is not real and has many inherent limitations. It does not reflect the results or risks associated with actual trading or the actual performance of any portfolio and has been prepared with the benefit of hindsight. Therefore, there is no guarantee that an actual portfolio would have achieved the results shown. In fact, there will be differences between hypothetical and actual results. No investor should assume that future performance will be profitable, or equal to the results shown. Hypothetical results do not reflect the deduction of advisory fees and other expenses incurred in the management of a portfolio.