Jennison Research Insights: Where Conviction Meets Construction

Harnessing Jennison’s fundamental insights through disciplined portfolio construction.

Core equity investing has become increasingly complex. Greater benchmark concentration has increased allocators’ exposure to embedded risks, while prolonged style cycles have created meaningful performance disparities. As a result, we believe investors must balance two competing objectives: maintaining the diversification and risk discipline expected from a core equity allocation while preserving access to the excess-return potential of active management.

Jennison’s Research Insights strategy was designed to bridge this gap by pairing high-conviction fundamental ideas with benchmark-aware construction. Within a diversified, low-tracking-error core equity framework, the strategy concentrates active risk in Jennison’s high-conviction investment opportunities, while limiting unintended exposures, seeking to preserve the discipline of a core allocation while enhancing its potential to generate excess returns.

The Core Challenge

Over the past two decades, prolonged cycles of style leadership, the rapid rise of passive investing, and a historic increase in single-stock and thematic concentration within major indices have reshaped the risk profile of core equity allocations. As benchmarks have become more concentrated, allocators have faced a more difficult task: maintaining diversified exposure while managing unintended risks embedded in the index itself.

These pressures have fueled growing demand for lower-tracking-error strategies, as investors seek tighter control around increasingly concentrated benchmarks. Yet academic research highlights an uncomfortable tension. Funds taking greater intentional active risk significantly outperformed their benchmarks and demonstrated stronger performance persistence, while non-index funds with the lowest levels of active share generally underperformed.¹

This creates a genuine dilemma. The portfolio structures best suited for core equity allocations, those emphasizing benchmark awareness, diversification, and risk control, have historically offered less excess return potential. At the same time, the high-conviction approaches most associated with alpha generation often introduce levels of volatility that can be difficult to accommodate within a core equity mandate.

The question, then, is whether allocators can achieve the risk control they require for core equity exposure while still having exposure to the areas where active management has demonstrated its strongest excess return potential?

Jennison Research Insights was designed to answer that question.

Drawing on more than five decades of fundamental research and active management experience, the strategy sources the highest-conviction ideas from across Jennison’s entire fundamental equity platform and constructs benchmark-aware portfolios that capture these opportunities within a low tracking error, customizable framework.

Rather than relying on a single stylistic viewpoint, the strategy draws its investment ideas from across Jennison’s dedicated US Growth, Global Growth, Value & Income, and Small & Mid-Cap specialist teams, each with its own investment philosophy, sector coverage, and research culture. These high-conviction ideas are then assembled into a single portfolio by the Jennison Custom Solutions Group, a specialist team that works alongside our fundamental investment teams, with deep expertise in portfolio construction, optimization, and risk management.

The result combines the depth and authenticity of Jennison’s bottom-up fundamental stock-picking with the discipline of a systematic, risk-balanced construction framework, delivering a more fundamentally attractive portfolio within tight risk constraints.

The strategy brings together complementary sources of potential value. Drawing on multiple sources of fundamental insight creates diversified pathways to generate excess return. A rigorous and repeatable portfolio construction process allocates active risk efficiently to the highest conviction ideas while systematically managing unintended risks and the interactions among individual positions. The result is a differentiated approach to core equity investing that combines the breadth of Jennison’s fundamental research platform with disciplined portfolio construction.

For a detailed analysis and overview of our Research Insights investment platform, please contact us below.