Daily life for an EPI Portfolio Manager

In talking to some of my colleagues in asset management I was recently reminded how much my role has changed as a portfolio manager with the introduction of our Enhanced Portfolio Implementation (EPI) framework. Tasks that previously required days of coordination and calculation can now be achieved in real-time. I have been asked by several clients how the portfolio management works in practice on a daily basis. This article shares a snapshot of how a portfolio is managed using EPI and the role of the EPI Portfolio Manager. 

A new approach to multi-manager investing

Traditionally, multi-manager portfolios operate with each underlying manager independently managing a pool of capital according to their investment objectives. While this approach ensures diversification, it also comes with challenges—investors must oversee multiple managers, handle operational complexities, and manage compliance across different strategies.

EPI changes this dynamic by separating manager insight from portfolio implementation. Instead of each manager trading independently, they submit model portfolios—lists of holdings and their weights—which are aggregated into a composite target portfolio. This centralised approach retains stock selection insights while significantly reducing operational inefficiencies.

Bringing manager insights together

To strike a balance between incorporating managers' latest insights and minimising unnecessary trading, we typically ask for weekly model portfolio updates for rebalancing activity. These updates can be submitted via a web-based portal or automated FTP uploads. Our research suggests that weekly rebalancing optimally balances tracking error with reduced turnover and transaction costs. Some managers choose to provide more frequent updates in response to significant market events or strategy shifts.

For example, in a Japanese equity EPI portfolio, we may ask all managers to submit their models on Wednesday, reflecting pricing as of Tuesday’s close. This alignment helps ensure smooth implementation and avoids unnecessary friction in portfolio adjustments. Some managers however may choose to submit more than one model a week, if there have been material shifts in their portfolio.

Managing the EPI portfolio: daily decisions

Every day, my role as an EPI Portfolio Manager revolves around three key responsibilities:

  • Building the composite target – Combining manager models according to client-directed weightings.
  • Assessing active risk – Evaluating how closely the portfolio aligns with the target.
  • Making rebalancing decisions – Deciding whether to trade, ensuring efficient implementation.

Managing an EPI portfolio is much like managing an index portfolio, except our target is a carefully constructed multi-manager combination rather than a traditional index. Client-directed manager weights determine overall positioning, and these weights can be adjusted tactically or strategically, depending on the investor’s preference.

Unlike rigid rebalancing to fixed weights, our approach allows manager allocations to fluctuate naturally with market movements, avoiding unnecessary trades. In the absence of new weight instructions, trades only occur when managers update their models, ensuring efficiency and cost control.

Leveraging technology for smarter rebalancing

To monitor portfolios in real-time, we use a rebalancing dashboard, a central hub that provides key metrics such as:

  • Pre-trade vs. post-trade tracking error
  • Active share relative to the composite target
  • Proposed trade volumes and expected turnover
  • Cash positioning changes

When new model portfolios arrive, we assess whether portfolio changes warrant trading. For instance, a model update might increase pre-trade tracking error to 0.45%. By rebalancing, we typically bring it back in line, usually within 0.15%, maintaining a tight alignment with manager insights.

Rules-based trading for efficiency

Alongside our risk-based approach, we apply systematic trading rules to minimise unnecessary costs. These include:

  • Trimming : Removing small, immaterial positions to keep the portfolio streamlined.
  • Banding : Ensuring trades only occur above a meaningful threshold to avoid excessive transaction costs.

By centralising trading and offsetting trades across managers, we significantly reduce turnover and trading costs compared to traditional multi-manager structures.

Collaboration and oversight

EPI is not just about efficient implementation—it’s about working closely with managers to ensure smooth execution. While managers focus on stock selection, we maintain regular dialogue, particularly during major market events like corporate actions or high volatility periods. This collaboration ensures that model updates reflect real-time market conditions and portfolio needs.

Final thoughts

The EPI framework provides a streamlined, cost-efficient approach to managing multi-manager portfolios, reducing operational burden while improving execution. As an EPI Portfolio Manager, my role is to ensure that investors get the best of both worlds—preserving the expertise of their chosen managers while benefiting from a smarter, more agile implementation process. By combining technology, risk management, and strong manager collaboration, we help investors achieve their objectives with greater efficiency and control.