While passive management simplifies many aspects of investing, alpha generation through active management is necessary for organizations to meet their future obligations. After an entire market cycle of disappointment from active management, the question for institutional investors is how to generate alpha in a better way.
At Epsilon, we create investment strategies from big data signals generated by the entire active management community. We think this approach is uniquely suited to solve the active/passive dilemma. It provides hybrid flexibility: active orientation geared towards top quartile long equity alpha, married with lower fees, better transparency, and daily liquidity.
Ultimately, we want to deliver consistent alpha to our clients. However, we believe that short-term performance is at the mercy of markets. Long-term results comes from process and a disciplined adherence to objectives:
“The first principle is that you must not fool yourself and you are the easiest person to fool.” – Richard Feynman
“We’ve had three big ideas at Amazon that we’ve stuck with for 18 years, and they’re the reason we’re successful: Put the customer first. Invent. And be patient.” – Jeff Bezos
“The plural of anecdote is not data.” – Marc Bekoff
So how do we deliver passive characteristics with active alpha? By removing the expensive pursuit of security selection. We do this through big data analysis of regulatory filings. We tap into the collective wisdom of all active managers to distill their cumulative research. This provides tremendous cost advantages for our products, which we can pass on to our investors. Our focus can then be on unbiased portfolio construction, the key ingredient in delivering consistent alpha.
We here at Epsilon are always interested in the evolving landscape of passive and passive like investment vehicles. A few weeks ago, BlackRock, the world’s largest purveyor of ETF investment…
We’re often asked by capital allocators, what type of investors are you? While one can take this as an existential dilemma, these firms “bucket” investment managers based upon a descriptive…
Editor’s note: Epsilon loves books on investing, and not just quant literature! Every month or so, we’ll post a review on a book that we found particularly compelling. While this…
767 3rd Avenue, 38th Floor New York, NY 10017