I’ve recently joined Astrocyte Research as the Head of Market Intelligence. Earlier this week, Astrocyte announced the acquisition of my technology, Passiv.AI. I am extremely excited to aid in your quest to protect and grow your client’s assets using Astrocyte’s suite of solutions, Portformer, Breakpoint, and now Passiv.AI. These products position Astrocyte to be a premiere technology vendor to wealth and asset managers.
Some background on me:
- I began designing Passiv.AI during my MBA at Babson, where I built a foundation in data science.
- I refined my skills at Furey Research Partners, a Small Cap equity research boutique founded by the former Lehman Small Cap Strategist.
- I grew up in the investment industry, my father a respected US Small Cap Value manager. (Portformer says you’re better off holding the S&P 400, but we won’t hold it against him.)
Passiv.AI has studied the “Great Equity Rotation” from Active to Passive investment vehicles, systematically analyzing ownership trends to identify investment opportunities. However, Passiv.AI’s overarching mission is to design research automation processes and analytics that:
- Free up an investor’s bandwidth.
- Eliminate subjective interpretation from objective data sets/government filings.
- Provide actionable investment insight.
My task? Accelerate Astrocyte’s growth. That means empowering you to close new customers, evaluate market conditions, and prudently manage client assets.
The best technology is built through open discussion. That’s why I’m here as your conduit between sales and product—to make that dialogue happen.
I want to illustrate the use cases for our products, understand what features are most valuable, and find out what changes would be best for your firm.
Why Astrocyte Research?
My research paints an extremely bleak view for the future of Active Management as it exists today. Astrocyte is on the same page. Portformer has found that ~85% of active managers fail to justify their fees (we recently published a whitepaper highlighting active managers’ failure to lower downside capture during COVID).
Large Active institutions have been on life support since the Financial Crisis. Stock buybacks, market appreciation, and rotating client assets to passive investment products have kept them afloat. Because Passive tends to gain ground into and out of market troughs, I believe outflows from Active into Passive products will only accelerate post-COVID.
While Passive’s rise has been meteoric, the consequences are widely debated. Of course, there are real reasons for investors to rotate out of active funds into passive equivalents (hence, the need for Portformer). But the growing dominance of Vanguard, State Street, and Blackrock largely ignores fundamentals. This dominance will be a key driver of market inefficiency moving forward.
As investors, we constantly reevaluate our holdings and sell out of securities when better opportunities exist, regardless of asset class, fund, or security. Our users champion Portformer’s objectivity in showing when investors should drop high-fee, low-performance mutual funds and rotate into “ETF replacements” for near-identical exposure (see VONG below, which is Portformer’s no-brainer replacement for Fidelity’s behemoth Contrafund… more to come on this soon).
No tool on the market offers head-to-head fund analysis like Portformer, nor does any tool demand fund manager accountability like Portformer.
Active managers are evolving out of necessity. They’re beginning to modernize their investment processes. Astrocyte’s technology can finally put them back on the offensive. Astrocyte founder and CEO Sean Kruzel and I believe wholeheartedly in the efficacy of active management and think the buy-side desperately needs new tools to thrive again.
We know there are exceptional active managers out there. That’s why over the next year and a half, we’ll showcase managers that actually earn their fees according to Portformer. We’ll make sure every prospective fund buyer knows exactly who they are.
We have just relaunched Astrocyte’s Breakpoint technology into the marketplace and believe it to be unrivaled as a sell-side regime change & risk modeling tool. Breakpoint’s “Competition of Models” pits machine learning against itself to identify when the models that predicted price action yesterday begin breaking down. The results are highly impressive. (Below, Breakpoint nearly top-ticks the market and alerts investors to exit SPY on February 24th of this year).
By flagging when an asset has entered a new paradigm, Breakpoint signals that conditions are changing and outputs a powerful return and volatility forecast. Growing reliance on the VIX as a decision-driver creates a “tail wags the dog” scenario where volatility begets more volatility–tools like Breakpoint are essential to identify these trends early.
With our flagship products:
We’ve layered powerful front and back office functionality together to empower your entire firm to increases returns while reducing cost and time. (See Portformer’s Competitive Intelligence product, which helps fund managers win good assets from underperforming competing products.)
Do you have a data or technology initiative at your firm but are unsure how to get it executed? Please do not hesitate to reach out.
Thank you and I look forward to speaking with each of you soon.
Head of Market Intelligence