Portfolio managers want to successfully grow their funds. However, sometimes asset inflows can degrade performance. Understanding the amount of assets under management an investment strategy can absorb can have a positive effect on overall returns.

How ITG can help

ITG’s expertise in transaction cost analysis and modeling enables us to provide unique insights into how you can determine the capacity of your investment strategy. Gaining prominence today, capacity analysis is used by portfolio managers to calibrate turnover levels, chief investment officers to determine growth options and plan sponsors in manager searches.

Leveraging ITG’s Agency Cost Estimator (ACE), we use real-world transaction cost estimates for various order sizes and time periods to examine the effect transaction costs can have on expected fund returns. ITG takes a statistical-based approach and performs simulations using different levels of assets under management and turnover, providing recommendations and metrics that will help you determine your fund’s optimal capacity.