EUROPE - Janus International, the US asset manager known for its growth style of investment, is launching four mathematically-based investment strategies aimed at Europe’s largest pension funds.

Denver-based Janus aims to capitalise on the demand from institutional investors for risk-managed products with a relative return strategy which aims to produce long-term returns 1% to 3% above the benchmark.

The four strategies – large cap core, large cap growth, large cap value and enhanced index - use a mathematically based, risk controlled process developed by Janus’s US–based affiliate INTECH, which it acquired at the beginning of the year.

So far INTECH’s products have been available only in the US. They will be now be distributed worldwide by Janus International through its offices in London, Tokyo, Hong Kong and Milan.

Richard Garland, chief executive of Janus International, said: “Pension funds will be our primary target. We will focus on markets where there are significantly funded pension schemes, particularly Holland, Scandinavia, Switzerland and the UK.

“We are targeting Holland in particular where they have been very aggressive in using passive managers. We think it’s a natural extension to show a risk-managed product to a pension fund that has already used a passive strategy.”

Robert Garvy, chairman and chief executive of INTECH, said: “Risk-managed mathematical strategies fit within the general diversification policy of these large funds. If they can put together a collection of high quality low risk active strategies then an extra 1% becomes of critical importance in a decade where the focus is on the funding of obligations, rather than in the 1990s where stock was chosen just by throwing darts at an index fund.”

INTECH identifies stocks with high relative volatility and a low correlation to each other. It then builds a portfolio with the ideal weightings of these stocks within specific risk constraints to generate a portfolio aimed at exploiting the natural volatility of stock prices.

The process is based on a theorem of Robert Fernholz who in 1982 identified “excess return portfolios” which could beat the index by an amount equal to 50% of the difference between equities with a high volatility relative to the index and a portfolio with low volatility.