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        The Case For Enhanced Active Strategies

        Enhanced Active strategies can allow investors to receive higher returns, but with lower tracking error versus the benchmark. By incorporating data-driven fundamental signals and top-down views, Enhanced Active can provide small incremental improvements over the benchmark – without deviating sharpy from the benchmark risk profile.

        Kishore L Karunakaran
        Managing Director

        What follows is an excerpt of the white paper. Download the full piece here.

        Over the past several decades, passive investments have become the default core holding for most long-term investors—particularly those investing in scale. Cost efficiency, liquidity and simplicity are just a few of the reasons why. And while these benefits do hold merit, there are other tangential approaches—such as Enhanced strategies—that may give investors additional return and are worth considering.

        Traditional binary definitions of ‘Active’ and ‘Passive’ no longer reflect the reality of today. Client needs and preferences are increasingly more complex as a result of the ever changing global landscape. This warrants a greater variety of solutions and approaches along the spectrum.

        Balloon Face

        Learn How Enhanced Active Portfolios Work

        Enhanced active strategies—also known as low tracking error active, or enhanced indexing strategies—are often overlooked or misunderstood. They are not diluted active management strategies, or passive strategies with a twist. They are purpose-built systems designed to deliver modest, persistent outperformance through disciplined, risk-aware decision-making.

        Download the Full White Paper

        An Enhanced strategy can offer a compelling alternative for investors seeking incremental returns above the benchmark, whilst taking on a tracking error that is 0.5%-2% lower than that of a traditional active strategy. This approach preserves the foundational benefits of passive investing while leveraging the strengths of systematic active methods, where each unit of risk must be efficiently rewarded.

        The elegance of an Enhanced approach is that it’s not a compromise between active and passive—it is a deliberate investment philosophy and approach: active in insight, modest in risk, and designed to deliver more from the core of your equity allocation.

        More on Equities

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