EAM Portfolios Dominate Traditional Fund Managers Over Past 12 Months: Results Defy One in 12.5 Billion Odds

PRINCETON, N.J., Nov. 17, 2020 /PRNewswire/ -- Turing Technology today announced that Ensemble Active Management ("EAM") Portfolios, based upon technology licensed from Turing, achieved a performance milestone that is believed to be unprecedented in the history of the investment industry: more than one–half of the EAM Portfolios that have at least a 12–month track record (9 of 16) would have ranked in the top 2 percentile of their corresponding mutual fund peer groups for the past 12 months^{1, 2}. The odds of these results happening randomly are less than one in 12.5 billion.

EAM has been supported by noteworthy research³, and now actual performance results are emerging that not only prove EAM can outperform most active managers, but show that they can dominate the elite managers.

Dr. David Blitzer, the former Managing Director and Chairman of the Index Committee of the S&P 500 and a Turing Board of Advisors Member, reacted to the performance data with, "For the past quarter century I have watched passive investing extend its dominance over traditional active managers. And now, for the first time in a long time, I am seeing an approach to active management that could emerge as a worthy competitor to passive investing. The verdict is still out, but EAM is without a doubt an intriguing and attractive development that clearly merits close attention."

Another member of Turing's Board of Advisors, Billy Beane, EVP of Baseball Operations for the Oakland A's and instrumental to the transformation of professional sports through the application of sports analytics (as partially detailed in the book and movie Moneyball), after seeing this performance data offered, "I am more of an outsider looking in, but these seem to be the type of validating data points that you would look for to validate that EAM is truly a superior data and analytic–based investment solution. I would expect that forward looking executives at major technology or investment companies are going to be intrigued by this."

EAM Portfolios reflect the latest research on alpha sourcing and delivery, and are grounded in core investment fundamentals that institutional investors have embraced for decades, such as multi–manager design, limiting all holdings to an underlying manager's high confidence overweight positions, and ensuring that the final stock selection reflects the highest consensus agreement across the managers. But EAM Portfolios were not viable until recent machine learning–based technology advances were able to unlock EAM's true potential.

Alexey Panchekha, co–founder and President of Turing, stated, "When I first saw these results, my first thought was 'welcome to the future.' Some industry experts would have told you that these results were not supposed to be able to occur. But they did. We always knew EAM was the next evolution in active management, and now the evidence continues to grow that EAM is, simply, the future of investing." He concluded with, "Candidly, no one is a bigger beneficiary than the end investors saving for retirement and other critical life goals."

As of the end of October 2020, 16 of the 34 EAM Portfolios that are in live production have at least a 12–month track record. Turing compared the one–year performance of these 16 EAM Portfolios to the entire mutual fund peer group of their respective asset classes. The 16 EAM Portfolios covered five asset classes (large value, large blend, large growth, small blend, and ESG), with the following results:

• 12 Portfolios ranked in the 1st quartile, of which:
• 3 Portfolios would have ranked as #1.
• 9 Portfolios ranked within the top 2 percentile. o A total of 10 (63%) were in the top decile.
• 2 Portfolios were within the 2nd quartile; 1 was in the 3rd quartile; 1 fell into the 4th quartile.

For more information on EAM Portfolios and to download the October EAM Performance Update, visit www.turingta.com. For more information on licensing Turing Technology's groundbreaking EAM technologies, contact John Nelson, Managing Director of Investments, at [email protected].

¹Source: Morningstar Direct.

²EAM Portfolio performance is calculated using standard Model Portfolio methodology, resulting in gross of fee and transaction cost calculations. However, if the EAM Portfolio returns were reduced by 1%, (100 basis points), the same 9 EAM Portfolios would still rank in the top 2 percentile of their respective peer groups.

³Key research includes: "The Active Manager Paradox: High Conviction Overweight Positions." October 2019, CFA Institute: Enterprising Investor; "Ensemble Active Management (EAM): Taming Toxic Tails." January 2019, CFA Institute: Enterprising Investor; "Ensemble Active Management: The Next Evolution in Active Investment Management." September 2018, authored by the EAM Research Consortium.

About Turing Technology (www.turingta.com):

Turing Technology is a technology and intellectual property firm founded in 2016 by two world–class applied mathematicians with a long history of innovation and entrepreneurism. The firm's capabilities emerge from the intersection of mathematics, machine learning, and innovation. A principal component of Turing's industry changing technologies includes its Hercules System and Database (a first–of–its–kind database capturing real–time, daily holdings and portfolio weights of actively managed mutual funds; the Database currently reflects information from more than $3.8 trillion in fund assets under management).

Turing is not an investment management or advice firm. It is a technology company that licenses its technology and Intellectual Property to investment management, insurance, brokerage, RIA, and wealth firms to allow them to create and deliver superior investment solutions.

For more information, contact: Barry Schwartz; 212–677–8700 x118, [email protected]

SOURCE Turing Technology

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