Investment

Netting Noteworthy Returns Through “Distinctly Active” Investing


E. Blake Moore Jr. is the president and chief executive officer of Cincinnati-based firm Touchstone Investments. Moore boasts nearly three decades of experience in the financial services industry. Prior to joining Touchstone in 2020, he served as president of North American Asset Management at Foresters Financial in addition to holding senior executive positions at Allianz, Mackenzie Investments, and UBS Global Asset Management.


Russ Alan Prince: Tell us about Touchstone’s investment philosophy and the importance of being “distinctively active” across market climates, especially considering the current volatility we are seeing.


E. Blake Moore Jr.: Touchstone Investments has been around for over 25 years, and since our inception, we’ve always been committed to active strategies and active management across all of our portfolios. We want people to understand our full commitment to being active. We are intentionally about as far from passive or index investing as you could possibly be.


When we decide to launch a fund and determine we want to be in a particular asset class, we search for asset managers that have proven experience and demonstrated expertise in that asset class to act as sub-adviser. We look for asset managers that have the skill, resources, and iterative process to make high conviction investments and hold them for the appropriate period of time to recognize investment results over a full market cycle.


We only hire asset managers that have a very distinctive approach and conviction regarding the securities they put into portfolios. Our selection and monitoring process is proprietary. We put them through an exhaustive analysis before we consider hiring them, and once hired, we perform due diligence at least once a year, to make sure they’re still the firm we hired and will produce the results we expect. It’s an iterative process because at the end of the day they produce the investment performance from our funds.


That’s a challenge for any manager, whether they’re passive or active. Touchstone believes active managers can add alpha and deliver better investment results versus tracking an index. Index investing is fine in certain situations; however, it is by definition agreeing to accept average results. Our philosophy is that through the due diligence we perform on our funds’ sub-advisers, we can potentially produce better results. As an investor or financial professional advising clients, finding assets that deliver above-average results is a win. And that’s what we’re all about. Our expectation is that Touchstone’s asset managers will produce better than average results across a full market cycle by managing in a distinctively active way. We’re not shy about letting people know they’re going to see volatility at times, but if you’re willing to live with that across a full market cycle, we believe you have better potential to build wealth.


Prince: What do you see next on the horizon for Touchstone amid the firm’s expansion into the ETF space?


Moore: Touchstone is a traditional mutual fund company, but we’ve been keeping an eye on the ETF market as it’s evolved over the last 20 years. The ETF market has largely been a place for passive index investing. In recent years, more and more companies have been looking at ETF structures as a place to have active investing. We previously determined that we were not going to offer passive ETFs at Touchstone; however, we realized ETF structures could be superior for some investors. Therefore, two years ago we decided it was time for us to build out our ETF capabilities for active strategies.


It took Touchstone about two years to create our ETF platform, but we can now launch active ETFs the same way we would with traditional investments. The firm currently has 14 sub-advisers, and at present, one is dedicated to focusing on our ETFs. The firm has four ETFs: two equity and two fixed-income.


As we think about future iterations of Touchstone and our product lineup, we anticipate launching additional strategies with other sub-advisers in the years to come. Active strategies are starting to take off within the ETF realm, and we expect that to grow significantly for us and other companies looking ahead.


Prince: How does Touchstone stand out among the pack while acting as a partner in a financial professional’s practice? 


Moore: I’ve been in this business for over 25 years and working with financial advisors for much of my career. It’s important for us to understand why financial advisors would choose to work with Touchstone because there are many product providers out there.  


One of the things that we do really well through our Practice Analysis Review program is to engage with financial advisors at an entirely different level. Our Practice Analysis Review program is a complete business review program geared to helping advisors run a more defensible, scalable, and efficient business. We’ve engineered a whole program designed to engage advisors and examine their entire business practices with actionable ways to improve their client mix, their asset mix, their fund mix, how they run their businesses, and how they’re spending their time. The goal is to help them understand how they can grow their businesses, make them more efficient, and at the end of the day, make more money. That’s a unique proposition.


It’s like having a personal fitness instructor. It’s one thing to tell people to do something, it’s another to have a coach sit there and show you how to do things. We do an analysis and then sit down and say, “Here’s what you can do to make your business better.” It works. Several of our distribution partners have endorsed our Practice Analysis Review program and are encouraging their financial professionals to use it.


RUSS ALAN PRINCE is the Executive Director of Private Wealth magazine (pw-mag.com) and Chief Content Officer for High-Net-Worth Genius (hnwgenius.com). He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals.

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