The manager runs both enhanced and traditional index funds. The enhanced products allow minor overweights of up to 1.2 per cent to be placed on shares accounting for 5 per cent of the portfolio, and 0.2 per cent for other shares, Puddy said.
“But overweights of up to 20 basis points only on any stock have been the maximum for the last few years. We have the capacity to do more, but we don’t work that way. We’re in the low risk space.”
Irlicht, now part of the three-person indexing team at IFM, will help manage its three discrete index fund mandates and the IFM 200 Leaders Fund, while also conducting research and developing further products.
Puddy said that future products from IFM would be built to cater for client needs.
“We will be driven by what the clients want in terms of equity products – whether it’s fundamental indexing product or something else like environmental, social and governance.”
As investments director of quantitative research at VFMC, Irlicht conducted a one-year pilot of fundamental indexing and found that the strategy outperformed the ASX 300 by 4 per cent in the year from July 2007.
A restructure of VFMC’s investment teams in January, which involved combining the fundamental and quantitative teams, eliminated Irlicht’s role.
His appointment at IFM replaces a former listed equities team member who left in the fourth quarter of 2008.
Commenting on the significant changes to AustralianSuper’s domestic equities portfolio, Delaney said the decision to cut the number of active managers did not reflect managers’ performances but was made because they often held similar investment positions due to the concentration of the Australian equity market.
“When you looked at the total portfolio, for a number of larger stocks there weren’t many significantly different positions.”
He said a similar cull of active managers in other portfolios was unlikely.
“It won’t be a policy decision to make everything half-indexed.”