Eventide's Systematic Strategies

Transcript:

At Eventide, we espouse investing that makes the world rejoice. We want to bring that message to different types of clients and who are employing different types of investment philosophies or strategies. And so we want to bring that story of investing that makes the world rejoice to the passive investor. And so these systematic strategies are our best efforts to bridge that gap. So what is systematic? Systematic is this new quasi-active subcategory that's emerging. You can put it in between a spectrum of traditional passive and fundamental active investing on a variety of factors. First, what is the objective? With passive investing, you're seeking to achieve beta, market participation. Fact of investing, you're seeking to achieve outperformance through alpha. This sits right in between there. Also, in terms of number of holdings, our systematic strategies will have less holdings than a passive strategy, but certainly more holdings than our traditional active strategies at the firm.

The level of human oversight, we're giving more thought to our universe than a passive strategy through our curated Business 360 process. And then lastly, in terms of cost, one can expect these systematic strategies to be more expensive than a passive strategy, but a cheaper access to Business 360 than our fundamental active strategies. So the promise of index funds is to offer extremely low cost market participation where you own the entire market and you just set and forget it. The problem with index funds is that if you were to apply any type of values-driven screen or philosophy, you would quickly discover that to invest in a index fund is to be values agnostic. And the degree to which an investor's convictions around avoiding certain issues like addiction or the destruction of life presents more and more problems with investing in a passive way. We want to invest in companies that are contributing to human flourishing and we do that through assessing their products and their practices and how they treat their stakeholders and the quality of their management teams and leadership.

So this is our values-based screening philosophy, but it's also what we believe is our competitive edge and how we generate alpha. The real advantage with systematic is taking that competitive edge and applying it across a very broad group of securities in a very scalable and systematic way.