Welcome to FinTech TV.
I'm Remy Blair.
Well, one of the many investment strategies that funds are using includes a systematic approach.
Now systematic investing includes math and data-driven methods.
It's an evolution from factor investment or smart data and sits in between passive index investing and a deep fundamental approach with nearly $16 trillion.
Some passive funds Systematic Investing is trying to reach investors who want a more thought out strategy.
Well, joining me here at the New York Stock Exchange today is Chris Grogan, portfolio manager, director of asset allocation services for Eventide Asset Management.
Chris, great to have you here.
Thank you so much for joining me.
Yeah, thanks so much, Roy.
I'm excited to talk about how investing is ownership and investors should root for what they own.
And for viewers who may not be familiar, can you tell us what exactly is systematic investment?
Sure, so systematic investing or this new asset class that's quasi-active, it sits right in between passive and fundamental on a variety of factors, number of holdings, costs, it's usually cheaper than high conviction active strategies and passive strategies.
There's typically lower tracking error and there's typically less human input into portfolio construction.
It's usually Something that's rules based or quantitatively driven.
And for viewers out there who might not be familiar, how does systematic investing actually differ from passive invest indexing and also traditional active management?
Sure, so in a passive index you're going to have hundreds if not thousands of constituents in a high conviction fundamental active strategy.
You're going to have a portfolio manager, typically lower lower amount of holdings, 30, 40, 50 holdings.
They're making active bets on stock selection, industry, composition, maybe they're taking big style bets.
There's higher tracking error, which is higher expected volatility around a benchmark.
And so Systematic is meant to take.
Um, investment philosophy where you know you believe you may have a competitive edge, but you're applying it with a rules-based approach across a broader range of securities, so it's really great for firms and investment approaches that have access to robust data sets and quantitative tools and have a unique investment philosophy that they think they can apply across the broad universe.
Yeah, and speaking of which, 2025 has been quite the year when it comes to the broader market.
So tell us about the guiding principles that shape eventide systematic ETFs and how you are paying attention to what's affecting the broader market.
Yeah, sure.
So even time we believe value creation is an underappreciated source of alpha, and value destruction is underappreciated source of risk, and so.
Uh, we believe that's a strong ethical case for investing, especially from a biblical worldview, which is how we approach the values based investment space.
We also think it presents a competitive edge, and so all the assets we manage at eventide, and we've been doing this for 17 years now applies this Business 360 approach where we seek to Avoid what we call ill-gotten gain or companies that are extracting value through could be questionable products such as products that are addictive in nature where you're relying on the customer to be addicted to generate marginal revenue or it could be related to practices that where we deem the management team.
Not doing a great job taking care of their employees and caring about their customers amongst other stakeholders.
And so what we're really trying to do through that Buss 360 process, and this applies to both our fundamental active and systematic strategies, is find what we believe to be the best, best in class companies within their industries that are excelling relative to peers in terms of how they care for their stakeholders.
Yeah, and Chris, we're here at the New York Stock Exchange hundreds upon hundreds of publicly listed companies in many different industries.
So when you're looking at the evaluation of companies and also taking a look at the bottom line of an organization, there are so many ways to approach organizations.
So walk us through what we're seeing right now when it comes to say factors such as ESG and sustainability.
Yeah, sure.
So yeah, that ESG is a very broad term.
It's funny.
A lot of what we do at eventide sounds like ESG, but it's very different, and I think, I think you see it, you know, we were discussing this, so you might see through a data vendor an ESG score that looks really great, but typically, you know, the data is getting better, but we've seen in the past where a company may have the resources to publish a really shiny CSR report and get that great ESG score, but you might have a small cap or a midcap company that is more internally focused and spending a lot of, a lot of uh.
Time and resources on ensuring that they're creating a great environment for their employees and they're delighting their customers, which is leading to great NPS scores or net promoter scores, which is a key factor that we look at and so you know, applying it in practice versus just consuming data from an ESG or a values-based data vendor is very.
It is a very nuanced process and that's why at Evenide we consume data from a lot of different resources and we have you know most of the large cap companies that come into our universe have multiple flags or issues or um areas that we need to dive deeper where maybe the data isn't available and so it really requires human discernment and an industry expertise to discern what is material and what is not.
So basically you're saying that artificial intelligence wouldn't be able to sift through that data and actually understand it as much as a human would.
Well, yeah, I wouldn't say never, but certainly I mean artificial intelligence is really helpful, especially, you know, it doesn't have any morals, so you have to give it some sort of moral framework to apply.
Um, but it can definitely make, and we've seen it in our team make us more efficient in conducting that values based assessment to kind of, you know, speed up the data mining, if you will, and having a lot of different lenses and dimensions to look at a company in terms of how they're treating the six stakeholders that we look at as a way that we're trying to love our neighbor and it enables our team to spend more time on those really, really.
More messy nuanced conversations around you know what does what does loving your neighbor look like in this industry or this company and what can lead to Obviously you know we're trying to seek ethical ethical investments as we are seeking to invest in a way that makes the world a choice, but we also are trying to seek out performance and a competitive edge.
And speaking of which, you mentioned CSR and that is corporate social responsibility.
We're here in 2025 about to head into a new year.
So based on your conversations with stakeholders as well as data analysis, what is the reality here right now for CSR?
Um Unsure, you know, we, we really try to be partners, so we're not, we're not. and I should say our fundamental analyst team is spending more time directly with management and getting to know what their philosophy is on leadership.
We really admire leaders who are servant leaders in terms of how they approach their business and their employees.
We have a particular expert.
Peace in biotech and early stage biotech investing, and so CSR reports become less relevant to that type of investment.
So we more so look at a company's products.
Is it a blessing to the world and also their practices?
Are they going about it in a way that's promoting the global common good in human flourishing?
Well, Chris, it was great to have you here.
Thank you so much for joining me and thank you so much for sharing the story of even time.
Yeah, sure, thanks for having me.
Thank you.
