You call yourself an active manager? Prove it!
That's exactly what Steve Graziano
, president of Touchstone
, intends to do with a new branding campaign for his firm's equity offerings.
The Concept of "Active Share"
The campaign is centered around the idea of "Active Share," a concept developed in 2007 by then-Yale professors Martijn Cremers
and Antti Petajisto
that gauges how much a fund differs from its bechmark. This Touchstone white-paper
outlines the concept and the underlying methodology.
In brief, any fund that scores a 10 in this system is 90 percent like its benchmark, and a fund that scores a 90 is only 10 percent like its benchmark, and so on.
Funds that score between 60 to 80 are considered "somewhat active," while those that score above 80 are considered "very active."
Graziano boasts that his firm's funds
score between 75 and 100 on this system, with 100, of course, meaning that the fund is nothing like its index.
The system is important, he argues, because it "gives investors the opportunity to see what they are paying for."
"If you are going to pay active manager's fee, you have to know that the active manager is not copying the benchmark," he recently told MFWire
In addition to online literature such as the Touchstone white-paper
, the branding campaign will involve banner ads, manager's videos, and new tagline for the firm that reads "Your Active Share Partner."
The poster child for this campaign will be Touchstone sub-advisor The London Company
, which helms the recently-launched Touchstone Large Cap Fund
, as well as the Touchstone Mid Cap Fund
and the Touchstone Small Cap Core Fund
This will be the primary melody sung by Touchstone sales staff as they communicate to the potential clients on the merits of Touchstone's equity products.
Part of the song will involve the idea that closet-indexers have little capacity to beat their benchmarks.
"Active managers are not homogenous. A good number of active managers are closet indexers and if you try to beat the benchmark, you are doing it on the fringe. You really have to shoot the lights out with a couple of stocks," Graziano said.
Another major theme that Touchstone sales folk will use is the idea that index huggers are vulnerable to the ups and downs of their benchmark and have little "wherewithal" to fight against downside.
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