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 www.janushenderson.com.

For U.S. and Canadian Institutional Investors Only

Not your country? Please choose your country here.

Information contained in this area of the Website is published solely for general informative purposes and intended only for United States institutional investors, consultants, registered investment advisers (RIAs), financial advisers (FAs), and other financial intermediaries who are knowledgeable and experienced in the financial services market and investment products. If you are a retail or individual investor then please leave this website. The information is not authorized for use in a jurisdiction where distribution is not authorized and is not intended for distribution to individual retail clients. If you choose to access this Website from locations outside of the United States, 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 as set forth in one of the categories described above, agree not to forward or make the contents of this site available to any person who is not an U.S. institutional investor, and agree to be subject to intechinvestments.com 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 intechinvestments.com 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.


Decline - I am not an Institutional Investor

With equity markets near all-time highs and interest rates near all-time lows, consensus return forecasts have dwindled and many institutional investors have turned to absolute return strategies to address their challenges. And while the potential of low correlation and downside protection from absolute return is great, finding the right strategy is challenging. Unfortunately, absolute return can bring on governance heartburn!

Allocation to Alternative Asset Classes by Top 100 US

Our ever-inventive industry continues to devise numerous ways of building portfolios with an absolute return objective. Disappointingly, many of these products use combinations of instruments that are often complex, illiquid, expensive and lacking transparency. And these problems often result in capacity limits that prevent large, institutional investors from making meaningful investments.

Equities to the Rescue?

Using equities for absolute return can overcome these shortfalls, but equity beta exposure can have a catastrophic impact on your portfolio. So, why even bother considering them for absolute return? Because we believe they offer the best potential for addressing the pain of absolute return.

In our paper, Why Equities for Absolute Return?,” we offer a look at the challenges with implementing absolute return today, the traditional problems with using equities to produce absolute return and a brief introduction to how Intech found a different way to use equities for absolute return results.

We found a new path by listening to the needs of our institutional clients and their consultants. They didn’t talk about risk parity, relative value or convertible arbitrage. They described the outcomes they desired and the challenges they faced with available offerings. Eventually, we built a strategy that attempts to address both issues, but starting with outcomes was paramount and our approach is instructive for investors evaluating any absolute return strategy.

Begin with the End in Mind

Any asset in an institutional portfolio should serve to improve risk-adjusted returns. And for absolute return, specifically, institutions typically seek three key attributes to meet that end: positive returns, low correlation and downside protection.

Generating positive returns over a market cycle provides a consistent alpha source to help fund future liabilities. Therefore, you need an alpha source that’s reliable in both up and down markets. Even if that exists in theory, execution is often tricky.

Strategies that have low correlation with existing assets are essential to improving diversification and portfolio efficiency. But these are rare. You need to uncover managers who have an investment philosophy that’s materially different from the crowd.

Mitigating the main risk to portfolio drawdown – equities – is key to increasing compound returns. But escaping the perils of beta risk leaves very little alpha, sacrificing beta’s contribution to total return. 

Now Address the Pain

With outcomes squarely in focus, you can now search for absolute return strategies that deliver on them and circumvent implementation pitfalls:

  1. Liquidity
  2. Fees
  3. Transparency
  4. Complexity
  5. Capacity

To overcome these challenges, investors need to deal with the causes of the problems, not the symptoms. For example, negotiating redemption fees or gate provisions to address liquidity is at odds with the fact that many managers see illiquid securities as critical to generating absolute return. The problem is not gate. The problem is the use of private equity, distressed debt, etc.

We detail the causes for each of these problems in the paper. Ultimately we believe publicly-traded equities – the bread and butter of our investment process for over 30 years – offer an abundant source of uncorrelated alpha that’s highly transparent, extremely liquid and far cheaper to implement in absolute return strategies than many competing approaches.

We invite you to learn more.

Equities For Absolute Return  A White Paper discussing the importance of absolute return, its pitfalls, and  potential. Read White Paper