Winning at Active Management: The Essential Roles of Culture, Philosophy, and Technology

Winning at Active Management conducts an in-depth examination of crucial issues facing the investment management industry, and will be a valuable resource for asset managers, institutional consultants, managers of pension and endowment funds, and advisers to individual investors. Bill Priest, Steve Bleiberg and Mike Welhoelter all experienced investment professionals, consider the challenges of managing portfolios through complex markets, as well as managing the cultural and technological complexities of the investment business.

The book’s initial section highlights the importance of culture within an investment firm – the characteristics of strong cultures, the imperatives of communication and support, and suggestions for leading firms through times of both adversity and prosperity.

It continues with a thorough discussion of active portfolio management for equities. The ongoing debate over active versus passive management is reviewed in detail, drawing on both financial theory and real-world investing results. The book also contrasts traditional methods of portfolio management, based on accounting metrics and price-earnings ratios, with Epoch Investment Partners’ philosophy of investing on free cash flow and appropriate capital allocation.

Winning at Active Management closes with an inquiry into the crucial and growing role of technology in investing. The authors assert that the most effective portfolio strategies result from neither pure fundamental nor quantitative methods, but instead from thoughtful combinations of analyst and portfolio manager experience and skill with the speed and breadth of quantitative analysis. The authors illustrate the point with an example of an innovative Epoch equity strategy based on economic logic and judgment, but enabled by information technology.

Winning at Active Management also offers important insights into selecting active managers – the market cycle factors that have held back many managers’ performance in recent years, and the difficulty of identifying those firms that truly possess investment skill. Drawing on behavioral economic theory and empirical research, the book makes a convincing case that many active investment managers can and do generate returns superior to those of the broad market.

Table of Contents

Chapter 1: Culture at the Core
Chapter 2: Culture in Investment Management
Chapter 3: The Nature of Equity Returns
Chapter 4: The Great Investment Debate: Active or Passive Management?
Chapter 5: A More Human Description of Investors and Markets: Behavioral Finance
Chapter 6: Active versus Passive Management: The Empirical Case
Chapter 7: The Case for Active Management
Chapter 8: Debates on Active Managers’ Styles and Methods
Chapter 9: The Jump from Company Earnings to Stock Prices
Chapter 10: Epoch’s Investment Philosophy
Chapter 11: High-Speed Technology
Chapter 12: Technology in Investing
Chapter 13: The Epoch Core Model
Chapter 14: Racing with the Machine

Appendix A: Selected Articles and White Papers of Epoch Investment Partners
Appendix B: Financial Asset Valuation
Appendix C: Feathered Feast: A Case