Equinox Asset Management: Starting Fresh
(6 pages of text)
After a two-year absence from the financial industry, Tom Henne evaluated his options and determined that he could exploit his knowledge of the inner workings of the pension fund business and start a new firm, Equinox Asset Management. Despite claims that many pension funds provided returns that did no more than mirror the average index, Henne believed his fund could beat the market or achieve alpha. He proposed that this success could be had by differentiating the Equinox fund in several ways from the typically large and well-branded funds of banks and insurance companies. Thinking he still had significant time to consider the details, Henne was surprised to receive a phone call from a local company wanting him to do a presentation on Equinox at its offices. Henne had only one week to decide the size of his fund, finalize his fee structure, identify his positioning and marketing strategy, and evaluate an appropriate client base. But most of all, he wondered whether the idea for his fund was even plausible.
In this case, students are expected to:
- Analyze the pension fund market.
- Understand the difference between defined benefit and defined contribution pension plans, their role in the industry today, and how the difference between the two regimes affects Equinox’s plans.
- Analyze Equinox’s capabilities to achieve alpha, along with its five investment styles.
- Calculate an “optimal” fund size for Equinox.
- Determine the most suitable target market for Equinox.
Finance and Insurance
Canada, Small, 2011
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