While the assets of many institutional, U.S. large-cap growth stock managers slumped precipitously last year because of horrible market conditions and client defections, one smaller boutique had great, well, growth in 2002.
Enhanced Investment Technologies LLC, Palm Beach Gardens, Fla. - better known as INTECH - won 83 (that's 77%) of the institutional searches it competed in last year against bigger institutional names such Marvin & Palmer Associates Inc. and Dresdner RCM Global Investors LLC. The firm's assets grew to $7.3 billion at year-end, compared with $5.7 billion a year earlier. INTECH has won 12 of 14 searches already this year and the pipeline for new business is full, said Bob Garvy, chairman and chief executive officer.
While INTECH does offer an enhanced equity index and a core equity strategy, its main attraction for institutional clients has been its quantitative active large-cap growth strategy, Mr. Garvy said.
INTECH offers a highly risk-controlled approach, with tracking error of about 2%, one of the lowest information ratios among U.S. money managers, and targeted excess return over the S&P/Barra Growth index of between 300 and 500 basis points, he said.
Mr. Garvy said: "Our numbers have been excellent for a long time. The strategy generates excess return from natural volatility, and we manage risk using mathematics. It's essentially a volatility capture strategy. We saw that people would become more risk-averse after 2000 and 2001." INTECH has added 10 new people over the past 15 months to prepare for its expected growth spurt.
Performance of the INTECH large-cap growth strategy was 7.34% for the fourth quarter, -15.37% for the year ended Dec. 31, annualized returns of -8.43% and 9% for three and five years, respectively. The strategy's recent returns compared favorably with its benchmark, the S&P 500/Barra index, which returned 7.11% for the fourth quarter, -23.59% for the year ended Dec. 31, -19.6% for three years and -1.08% for five years.