Pandit says AMP’s fundamental equities analysts’ bottom-up views are married to a top-down view that draws on the expertise of the wider AMP group – including Mark Beardow’s fixed-income team and Shane Oliver’s strategy and economics team.

“We will fish from value and growth stocks at the right time of the cycle to derive alpha,” Pandit says.

“The market’s already narrow enough – 30 per cent banks, 30 per cent resources, 30 per cent industrials, 10 per cent health care – so why narrow your universe? Why not broaden your universe and take advantage of all opportunities?

“There is a stage to be in value and there is a stage to be in growth, but if you can time your movements between value and growth stocks, you can outperform in all types of markets.”

Pandit says that despite the recent success of index funds – particularly low-cost exchange-traded funds – there is a clear role for active managers, provided they can generate sufficient alpha and demonstrate capital preservation skills to justify the quantum of the active management fee.

Pandit selects no more than 35 of the analysts’ best ideas for the concentrated equity fund, which will be capped at $2 billion so his alpha-generating abilities are not diluted.

The fund will have higher volatility and a higher tracking error than a more broadly based equity fund, but Pandit says: “Alpha generation is the key to this product.”

“It’s had a successful track record in places I’ve previously worked,” he says.

“I’ve always run concentrated money; and I’ve had positive returns over the past seven years, on concentrated money,” he says.

“You’ve got to be able to demonstrate… that you can weather all kinds of markets. That’s what I demonstrated with ING before joining here, and I think one of the main reasons [head of fundamental equities] Ella Brown hired me was because of my previous track record.

“And certainly a previous track record is a starting point, not an end point. But in 2008 the Select Leaders Concentrated fund outperformed the index by 500 basis points – the market was down 40 per cent. In 2009 it outperformed by 500 basis points when the market went up; and in 2010 it outperformed by 400 when the market was flat.”