The investment managers at eOmega Solutions Inc., Menlo Park, Calif., don't worry about beating standard benchmarks. The company, which offers a managed account strategy to defined contribution plans, is most concerned about achieving the minimum acceptable return that plan participants need to fund their retirement.
Chairman and Chief Investment Officer Frank A. Sortino, founder of the Pension Research Institute at San Francisco State University, where he is professor of finance, emeritus, is one of the firm's founders.
James Kaffen, president and chief executive officer of eOmega, said the firm's founders believe their quantitative methods, based on post-modern portfolio theory, can take products such as the mutual funds offered in DC plans and consistently achieve better returns.
The firm's Managed Account Builder program tailors portfolios to each participant's minimum acceptable return. It builds portfolios for six MARs — 4%, 6%, 8%, 10%, 11% and 12% — using the DC plan's existing fund lineup, or any fund platform, creating the best combination of investment options to meet a participant's optimal asset and style mix.
The firm calculates participants' MARs based on age, the age they want to retire, the amount of retirement assets they currently have, annual income and annual contributions.