In active equity investing, process and humility may matter more than certainty 

Andrew Hall does not describe stock picking as a triumph of conviction over doubt. If anything, he frames it the other way around.

His vision is to buy good businesses with strong balance sheets, run by people you trust, while staying acutely aware that you may still be wrong. That blend of clarity and humility sits at the centre of Hall’s approach to active equity investing.

In a market where active managers are under constant pressure to justify their value-add, it is a compelling place to start.

Good investing is as much about what you avoid 

Hall’s approach is simple in theory but hard in practice. He looks for businesses that can compound faster than the market. These firms show high returns on reinvested capital, strong balance sheets and trustworthy, transparent management. That is the long book in its simplest form. What makes Hall’s view more interesting is how much it is shaped by thinking like a short-seller.

Early in his career, Hall worked with investors skilled at spotting “doggy businesses.” These were companies with weak economics, poor capital allocation or unreliable management. The experience left a mark.

Even when assessing winners today, Hall asks what the ‘short case’ might be. Is the moat shrinking? Are the accounts worsening? Are there signs of disruption, financial strain or questionable management behaviour?

That lens has helped Invesco avoid businesses that looked attractive at first but revealed deeper problems. Hall points to a mission‑critical software company as an example.

Revenues seemed sticky on paper, but his team found a management group chasing growth at any price, a major acquisition that strained the balance sheet, and a series of accounting and capital allocation red flags. The business had strengths, Hall admitted, but not enough to outweigh the warning signs.

This is a useful reminder that process is not just about discovering great companies. It is also about systematically screening-out the seductive ones. They might appear strong but only closer inspection reveals that they fail basic tests of trust, discipline or strategic coherence. 

Psychology may matter more than valuation models 

A second major theme in Hall’s remarks is that investing is not just an analytical exercise. It is also a psychological one. Investors like to talk about models, earnings and valuation, but Hall is candid that fund managers are still human, and humans carry biases into every decision they make. 

In Hall’s case, he says he tends towards conservatism, which can mean missing opportunities because his expectations are too cautious. Other members of the team may be more naturally optimistic. Neither bias is fatal on its own, but both need to be recognised and corrected for. That is why Invesco’s process appears designed not just to evaluate stocks, but to challenge the emotional habits of the people evaluating them. 

One of the most useful examples is Hall’s use of “thesis breakers”, a kind of pre-mortem built into the front page of the research. Instead of simply writing down why an investment should work, the team asks what is most likely to go wrong over the next five years. That creates a trigger point. If the identified risk starts to materialise after purchase, the team already has a framework for acting rather than rationalising. 

“You have to approach this job with humility.” 

This might sound procedural, but it is actually philosophical. Hall is saying that good active management is not about pretending certainty exists. It is about building a process that is resilient to overconfidence, attachment and hindsight bias. In a profession that still often rewards certainty theatre, that is a meaningful distinction. 

High conviction still requires patience 

Hall’s portfolio construction reflects that same discipline. Most of the fund is invested in what he calls “classic compounders”, durable businesses capable of reinvesting capital at attractive rates over long periods. Alongside them sits a smaller allocation to “improvers,” companies or industries going through meaningful change. Here the market may be underestimating how much stronger the end-state could be. 

A regional airline in Europe is one example. Hall saw the industry heading into consolidation and believed the company would emerge in a stronger position. Covid accelerated that thesis in ways nobody anticipated, but the broader point stands.

Invesco is not simply buying quality. It is trying to buy quality at moments of contention, when the market is worried about something the team believes is temporary, misunderstood or overstated. That emphasis on timing without becoming market-timing is important.

Hall says the team maintains a “bench” of businesses it would like to own and waits for opportunities to arise. A blue-chip streaming service was one recent example. The team had followed the company for a long time but only felt it became attractive enough to buy when market concerns around a major acquisition created the right entry point.

For advisers, the lesson is that conviction should not be confused with urgency. Often the edge comes from patient preparation, not fast reaction.

Active management survives by improving, or it disappears 

Perhaps the most striking part of Hall’s remarks was his honesty about the pressure active managers face. Asked whether his role would still be relevant in a decade, he did not reach for a stock answer about enduring human judgement. Instead, he acknowledged the threat directly. Active management, he said, is Darwinian. Many managers will be eliminated over time, and they should be. 

That answer matters because it goes to the heart of what advisers are increasingly asking: what justifies active fees in a world of cheap beta and relentless benchmarking? Hall’s response is not that active always wins, but that it can only survive through relentless improvement. At Invesco, that means reviewing every important decision, the buys, the sells and the ideas not pursued, then analysing hit rates and recurring mistakes to refine the process year after year. 

In that sense, Hall is making a broader argument about what active management should look like in 2026. It should be less about heroic forecasting and more about disciplined learning. Less about certainty, more about decision quality. And less about claiming exemption from the rules of the market than about building a process robust enough to survive them.