Over the past decade, our research has taken multiple in-depth looks at the exogenous drivers of what we think of as “alpha availability” among active managers.
With the growing popularity of ESG and the incorporation of ESG metrics in various investment strategies, the debate on whether ESG is a source of alpha or not continues.
The ensemble approach, in a broad sense, refers to combining multiple units (which could be models, methods, or components) to work together to achieve more accurate and reliable outcomes than any individual unit could achieve alone. This is akin to making a decision based on the collective wisdom of a diverse group, rather than relying on a single opinion.
In 2011, FIS Group published a research paper which analyzed the drivers of entrepreneurial (or smaller) manager outperformance in US equity strategies from 2006-2010.1 While the study illustrated out-performance for five out of seven long-only equity investment styles offered through smaller managers/strategies (based on assets under management (AUM)) relative to their larger manager peers, it also detected the apparent beginnings of diminishing excess returns to fundamental active equity management strategies in the post-financial crash period. The most marked erosion of return has been observed among active Large Growth and Large Core products. By the end of 2012, the S&P 500 Index had risen over 100% since the market bottom in March 2009; but as a class, U.S. Large Cap active managers have been underperforming the market benchmark with a tenacity that is troubling. The paper analyzes several key questions including:
In December 2023 Tina Byles Williams, Founder, CEO and CIO of Xponance, hosted 24 CEOs from among the firm’s currently funded sub-advisors to participate in a roundtable discussion on the most pertinent challenges to emerging and diverse investment management companies.
Having introduced concepts in artificial intelligence and different types of machine learning (ML) models in our previous post, we will now discuss specific applications of machine learning in investment management, the benefits of using these models, and the challenges inherent in their use.
Philadelphia, October 17, 2022 – Xponance, Inc., a multi-strategy investment firm, announced today that Michael A.B. Orr has joined the firm as Managing Director & Chief Investment Officer of the firm’s Alternatives subsidiary, Xponance Alts Solutions, LLC (“XAlts”).
There is reason to be bullish on Japanese equities, due to market reforms and interventions over the past decade. In this note, we will recap those reforms we see as most relevant for global stock pickers, followed by insights from a selection of our high conviction boutique managers.
In a paper entitled Generative AI – Hope, Hubris, or Harrowing, our CIO, Tina Byles Williams, explored the medium to long-term effects of Generative AI on the economy, financial markets, and broader society. The task for investment managers now lies in navigating this promising yet unpredictable future, particularly as the market has priced in substantial premiums for those perceived to be the primary beneficiaries of this emerging technology.
Philadelphia, PA – February 1, 2022 – Xponance, Inc., a leading multi-strategy investment firm, and As You Sow, a nonprofit that promotes environmental and social corporate responsibility, today announced that they have formed a new partnership.
For 19 years FIS Group has successfully invested with entrepreneurial managers in global equities markets based on the considerable body of research suggesting that talented, high-active share, entrepreneurial managers are best positioned to outperform market benchmarks, net of fees. We believe that there are generally two reasons, both timeless and universal, why this inefficiency will continue. First, entrepreneurs with “skin in the game” are motivated to work harder, as entrepreneurs generally are in every other business across the time and space of human history. Second, in the modern markets of listed equities, size and scale are the enemies of alpha. While we have long known both of these simple (but nonetheless surprisingly ignored) truths to be self-evident in asset management, the significant opportunity of investing with entrepreneurial managers continues unabated. However in our firm’s 19 years of investing and decades more of experience of our principals, we have rarely (if ever) seen so clear a demonstration of both of these sources of alpha in one simple chart.
Xponance, Inc., a multi-strategy investment firm, announced today that it will expand its business to include alternative capabilities for institutional and other qualified investors. The firm has hired industry veteran Marquette Chester as Senior Managing Director to lead this effort.
The Differentiated Income strategy is a yield driven approach that derives alpha from unique, and diverse income streams. Income/yield is enhanced through callable securities, optionality, security structure, and variable rate coupons.
Xponance, Inc., a multi-strategy investment firm & industry leader in sourcing alpha from diverse professionals and managers, announced today the hiring of industry veteran Lisa Hinds as Managing Director, Client Engagement and Sustainability.
In a perfect world (for boutique managers), investment talent and execution would be enough. The best managers would prove their worth through performance, and allocations would follow.
There are decades when nothing happens and there are weeks when decades happen. The last three years and particularly the weeks since February 24th have coughed up more so-called ‘tail-risk’ events than the entire pre-pandemic decade!
Q1 2022 saw the largest one quarter outperformance of international value in twenty years, and yet 93% of international value managers underperformed the international value benchmark.1 While the disruption of commodity markets from the invasion of Ukraine led to outsized returns in commodity sensitive stocks …
Geopolitical uncertainty, war, and commodity price shocks have been the headline talking points for the industry in 2022. These certainly contributed to the current stagflationary pressures in the market, however, …