Winning at Active Management

Epilogue

Our goal in writing this book has been to describe the qualities that we think are essential in the creation and perpetuation of successful asset management firms. We have also tried to describe Epoch Investment Partners, and to map out our place in an industry undergoing rapid change in its strategies, its channels of distribution, and its use of technology.

In the end, all of the ideas we have discussed in this book are encapsulated, in one way or another, in Epoch’s aspiration statement:

To provide superior risk-adjusted results using a transparent approach based on our free cash flow philosophy;

To serve investors who seek and value Epoch’s investment approach;

To continue as a thought leader and innovator in global investment management.

First is Epoch’s recognition of its charge: deliver positive risk-adjusted results through a transparent methodology—judging and selecting companies for investment based on their ability to generate free cash flow and to allocate that cash flow properly, rather than on their earnings as calculated under accounting principles (those that are generally accepted, or the more flattering non-GAAP variations many companies have devised). Cash flow is the true measure of a company’s economic profit. This is not only our intellectual and theoretical viewpoint: the durability of cash flow as a positive factor in stock returns has stood up to rigorous academic analysis. Our analysts and portfolio managers have developed an expertise in ...