Ensemble Active Management
Ensemble Active Management (EAM) technologies and techniques power everything we do. It's a breakthrough approach to active equity investing.
Using fund replication and advanced machine learning techniques, we work with our technology partner to access the real-time portfolio holdings of multiple institutional mutual fund managers. Then, we use Ensemble Methods to reveal the real time consensus across the individual fund managers’ holdings. The process creates a new chapter in active investing as a first of its kind use of ensemble methods to build strategies designed to achieve alpha and reduce risk that institutional firms can easily access.
Real-Time Holdings & Weights from Any Mutual Fund
Ensemble Active Management (EAM) is built to provide transparency into active mutual fund managers' real-time stock holdings and weights.
EAM allows us to see exactly where institutional experts are investing right now.
This comprehensive fund visibility is foundational to EAM's ability to deliver strategies built on the consensus of institutional fund managers: Wisdom of Experts. It’s a level of data-driven transparency that delivers an information edge in today's market.
Real-time access to holdings & weights from select mutual funds
Real-time visibility into high-conviction positions
Data transparency that reshapes best practice on how active portfolios should be built
A Mutual Fund is a Predictive Model
Ensemble Active Management is built on the realization that a mutual fund is more than just a collection of stocks—it’s a predictive model. A mutual fund’s overweight-to-benchmark stock selections reflect the manager’s predictions for future performance relative to the benchmark. By analyzing these high conviction holdings, the technology reveals every active mutual fund manager’s “Best Bet,” carefully chosen investment predictions targeted to outperform versus benchmark.
Understanding a mutual fund as a predictive model sets the stage for Ensemble Methods, a mathematical technique that synthesizes the predictive power of a cohort of mutual fund managers - competing against the same benchmark - into a single real-time consensus strategy designed to outperform the benchmark.
High conviction overweight position in a mutual fund represent a manager’s predictions
Analyzing predictions reveals untapped investment opportunities
Compiled manager predictions fuel Ensemble Methods
Pinpointing Consensus through Ensemble Methods
We’ve arrived at the heart of EAM. Ensemble Methods is a mathematical technique that builds a single, highly accurate predictive model from the consensus of many other predictive models—In this case, individual mutual funds’ “Best Bet,” stock picks.
By using replication technology to access the real-time holdings of independent mutual funds, and then applying Ensemble Methods to the results, EAM can pinpoint where multiple independent strategies align. We know which stocks fund managers agree on as their consensus Best Bets.
These consensus stock picks form the foundation of EAM strategies. EAM combines the collective insights of a virtual multi-manager team.
Identifies consensus best real-time stock picks
Combines consensus stock picks based on shared real-time high conviction
Builds strategies representing real time consensus of high conviction
Introducing Ensemble Alpha
Through Ensemble Active Management, NextFolio opens a new chapter in active investing: Ensemble Alpha. EAM strategies deliver diversified, real time portfolios by drawing from the collective high conviction stock picks of select mutual fund managers. These ready-to-go strategies are easy for institutional firms to implement, providing a unique, scalable, differentiated approach to active investment management.
Ensemble Alpha changes the future landscape of all active equity management.
Built on Consensus Best Bets
A New Standard in Strategy Design
Tailored for Institutional Firms
All 9 Morningstar® Style Boxes
EAM Strategy Benefits
NextFolio's EAM strategies provide institutional investors with benefits that help grow and differentiate their businesses. From increasing fee revenue to protecting margins, NextFolio equips your firm with the tools you need to compete.
Business Potential
Our EAM strategies focus on real-time, consensus stock picks from institutional managers, giving wealth firms access to unique, brandable active strategies.
Risk Reduction
Leveraging insights from multiple managers, EAM strategies reduce reliance on any single manager, offering a more diversified approach.
Adaptive Strategies
NextFolio's EAM strategies adjust to market changes so that portfolios stay flexible, responsive, and aligned with evolving institutional insight.
Competitive Edge
EAM strategies allow firms to position themselves as true investment innovators, leveraging data-driven insights to stand out in a competitive market.
NextFolio Strategies are Built for Institutional Success
Diversify Your Offering
Expand your lineup with strategies across all nine domestic equity style boxes, to provide fresh investment opportunities.
Increase Fee Revenue
Differentiate with high-value strategies that support premium fees and enhance your firm’s revenue potential.
Stop Fee Compression
Deliver unique strategies that protect your margins from the pressures of industry-wide commoditization.
Scale Easily
Scale with no need for heavy investments in additional staff, making growth efficient and cost-effective.
Implement Efficiently
Quickly integrate our strategies, available on a white-label basis, reducing the resources needed for internal strategy development.
Set Your Firm Apart
Offer innovative, data-driven strategies that showcase your firm’s leadership in forward thinking.
Offer More Insightful Strategies with EAM.
Discover how using EAM delivers timely and accurate insight into the real-time thought of institutional mutual fund managers.
Ensemble Active Management (EAM) is access to the real-time consensus best stock picks of multiple mutual fund managers competing in the same style box against the same benchmark.
EAM accesses real-time portfolio holdings of mutual funds, and then applies Ensemble Methods to identify consensus best stock picks across multiple managers.
EAM strategies provide diversification, which leads to risk reduction, greater adaptability to market changes, and a competitive edge by leveraging real-time insights from multiple managers.
Machine learning powers EAM’s ability to access and analyze the real-time holdings and weights of mutual funds (information typically not publicly available), offering unmatched visibility into high-conviction stock picks.
Ensemble Methods is a predictive mathematical technique that combines insights from multiple independent models, such as mutual funds, to build a single, highly accurate predictive model. In the context of investing, it identifies where fund managers agree on stock picks, creating more accurate, timely and diversified strategies.
Ensemble Methods relies on real-time access to independent data sources, which hasn’t been available until recently. Historically, mutual fund holdings have been disclosed only with significant delays, making it difficult to apply this approach. With proprietary new technology that provides real-time access to holdings and weights, Ensemble Methods can now be used effectively in portfolio construction, resulting in EAM.
Ensemble Alpha is a new category of performance delivered by EAM, drawing on the collective expertise of multiple fund managers to build diversified, high-conviction portfolios.
By leveraging the real-time insights of multiple managers, EAM reduces reliance on a single manager's decisions, creating a more balanced, consensus-based, diversified strategy.
Consensus stock picks represent the shared high-conviction stock selection of multiple managers, offering a real-time, consensus insight into multiple experts rather than a single manager operating in isolation.
Yes, EAM strategies are available across all nine Morningstar® domestic equity style boxes, providing a comprehensive range of options for institutional investors.
No. EAM portfolios are composed solely of long-only, US domestic equity securities, drawn directly from the benchmark. This ensures that all portfolios are style-pure, meaning a Large Blend portfolio, for example, contains only stocks from the Russell 1000 benchmark.
A traditional fund of funds combines entire funds without considering overlap in stock selection. Ensemble Active Management, however, identifies where managers agree, selecting only the stocks with strong consensus for its portfolios—offering a more focused and efficient approach to strategy construction.
EAM portfolios come in two versions: a 25-stock equal-weighted version or a 50-stock weighted version. In the 50-stock version, securities are weighted based on their overweights relative to the benchmark. In the 25-stock version, the top 25 securities are equally weighted at 4% each.
EAM portfolios are updated every other week. The underlying EAM portfolio mutual funds are reevaluated for consensus between them, and the new portfolio trades are typically implemented every other Monday.
Contact us to explore how NextFolio’s EAM strategies can differentiate your firm’s active management offerings.
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