Overview
Intech offers institutional investors highly disciplined,
mathematical investment strategies based on a
rigorous mathematical theory that is the result of
research conducted by its founder, Dr. E. Robert
Fernholz and published in the 1982 paper, “Stochastic
Portfolio Theory and Stock Market Equilibrium,” a copy
of which is available on our website at
www.intechinvestments.com. Dr. Fernholz conducted a
rigorous mathematical analysis to identify the
underlying sources of long-term portfolio performance.
Specifically, his research demonstrated that a portfolio
rebalanced to maintain constant weights exhibits a
compound return that depends on two key factors: the
compound returns of the individual underlying stocks
and an "excess growth rate." This excess growth rate
arises from the difference between the stocks'
variances and the diversified portfolio's variance. This
fundamental dichotomy implies that a portfolio's return
can be enhanced by either 1) selecting stocks with
higher returns relative to their peers or 2) optimizing
the mix of stocks based on their variances and
correlations. The former is a function of differences in
cross-sectional returns, while the latter hinges on
disparities in volatilities and correlations among stocks.
We design our investment approach to capitalize on
both components of this mathematical formula. We
incorporate alpha sources based on volatility and
fundamental insights to capitalize on portfolio effects
and stock effects, as
outlined by Stochastic Portfolio
Theory. We harness the power of rebalancing, seeking
to capture diversification and generate positive excess
returns, thereby translating theoretical concepts into
actual trading profits. Our portfolio positioning strategy
involves optimizing each portfolio to balance risk and
return. This ensures our portfolios are optimized to
meet our clients' investment objectives. See Item 8 –
Methods of Analysis, Investment Strategies, and Risk
of Loss, for more information.
Some clients impose restrictions on investing in certain
securities or types of securities (e.g., exclusion of
tobacco companies) and, as a result, performance
results vary between restricted and unrestricted
portfolios. Intech reserves the right, in its sole
discretion, to reject any client account that seeks
restrictions Intech is unable to implement or which will
fundamentally alter the investment objectives of the
strategy selected by the client.
Intech has provided institutional investment
management services since June 1987 and has been
registered with the SEC as an investment adviser since
October 1987. Intech is organized as a Delaware
limited liability company. Intech is majority owned by
Intech Holdings, LLC, a Delaware limited liability
company, which is owned by Intech’s current and
former employees, its founder, and board members.
As of December 31, 2023, Intech had regulatory assets
under management approximating $8.8 billion on a
discretionary basis.