New Take on Old Debate – Active v. Passive: Breakthrough White Paper Details Outperformance of Disruptive AI-Based Investment Approach
NEW YORK--(BUSINESS WIRE)--Sep 5, 2018--A newly available White Paper published by the EAM Research Consortium, “ Ensemble Active Management – The Next Evolution in Investment Management,” tests the viability of a new approach to active management, Ensemble Active Management, versus traditional Active and Passive Management. Ensemble Active Management ( “EAM” ) is the result of investment management being ‘re-imagined’ through the insights of technologists, and the proven power of Artificial Intelligence.
“EAM Portfolios” are built by applying time-tested “Ensemble Methods,” a core component of Artificial Intelligence and Machine Learning for decades, to the high conviction stock selections of traditional actively managed mutual funds. The result is a ‘multi-expert’ solution, vs the ‘single-expert’ paradigm of traditional Active Management. To test the concept, a massive database was built consisting of 30,000 EAM Portfolios, evaluated over more than ten years, and featuring more than 165 million data points.
The clear, statistically significant conclusion was that EAM-based portfolios have a higher probability of outperforming both traditional actively managed mutual funds and the S&P 500 Index over time.
“In the early 1990’s, I was a core member of the team that launched ETFs and permanently changed the course of investment solutions,” said Robert Tull, a White Paper Contributing Editor and an ETF industry icon since the industry’s founding in 1993 (as demonstrated by being recently awarded the ETF 2018 Nate Most Lifetime Achievement Award). “Now, 25 years later, I am excited to be part of the team introducing a breakthrough approach to investing that should change the face of investing once again – Ensemble Active Management. Technology enables innovation, and in this case, investors win.”
Key findings from the White Paper include:
The above data would compare to the ACTUAL results for actively managed large cap US equity funds versus their corresponding index funds, where active funds outperformed only16% of the rolling 1-year periods and 0.4% of the rolling 3-year periods (January 2008 to December 2017) 1.
In addition to a thorough presentation of the data and its analysis, key sections of the White Paper include:
About EAM Research Consortium:
EAM Research Consortium is a group of technology professionals, data scientists, investment professionals, and academics who believe that Ensemble Active Management is a real and viable concept, and who have come together to advocate for its broader acceptance and use.
1 Source: Morningstar Direct.
View source version on businesswire.com:https://www.businesswire.com/news/home/20180905005196/en/
CONTACT: For EAM Research Consortium
Barry Schwartz, 212-677-8700 x118
KEYWORD: UNITED STATES NORTH AMERICA NEW YORK
INDUSTRY KEYWORD: TECHNOLOGY DATA MANAGEMENT SOFTWARE OTHER TECHNOLOGY PROFESSIONAL SERVICES FINANCE OTHER PROFESSIONAL SERVICES
SOURCE: EAM Research Consortium
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PUB: 09/05/2018 09:00 AM/DISC: 09/05/2018 09:01 AM