Advisors are in the business of managing client expectations, as noted advisor and Texas Tech professor Deena Katz likes to say, but for many advisors, managing money to meet those expectations can be beyond their ken or outside their business model.
So then, who are the best professional money managers, particularly in the separately managed account space? Which managers stick to their professed alpha-delivering knitting and do it year after year, throughout business and market cycles? Which managers can customize their offerings for clients' specific SRI or tax needs? We've done that work for you: for the ninth year in a row, Investment Advisor magazine has teamed with the Denver-based research and due diligence firm Prima Capital, now Envestnet | Prima, to announce the best separately managed account managers in multiple categories.
This year, the SMA Managers of the Year will be celebrated at a live event in Chicago, in online interviews posted to AdvisorOne and in the cover story of the June issue of Investment Advisor. (See the 2013 SMA Managers of the Year home page for more information and coverage.)
"Calm, cool and confident" is how we characterized last year's SMA Managers of the Year. "They've seen it all before and continue to outperform in the most volatile of markets."
"Seen it all" didn't consider the increasingly bifurcated markets and economy that were in play throughout 2012 and continued this year; record debt and deficits, budget sequester and ongoing high unemployment on one hand, and rebounding housing, manufacturing and new highs on the Dow and S&P 500 on the other.
How do they not only manage in such an environment, but outperform—as measured by 12 factors—their peers in calendar year 2012, as our nominees did? How do we choose the absolute best? Is it all about one-year performance? (No, it's not.) Picking the finalists and eventual winners is a difficult decision that springs from a well-honed, collaborative process that always keeps advisor access and the strategies' place in client portfolio-building top of mind.
The process begins each year with Envestnet | Prima looking for repeatable, sustainable investing processes in the SMA managers' strategies. Each strategy must have a clear "alpha thesis," and be available to advisors on multiple platforms to even be considered as candidates for this annual honor. The products must report to the PrimaGuide research application, have at least $200 million in assets and have tenured management of at least three years. Products and managers must rate highly according to Prima's due diligence process, which uses a proprietary, systematic, multifactor manager evaluation methodology that combines both quantitative and qualitative criteria. There are 13 factors that the Prima analysts consider before recommending the finalists for SMA Managers of the Year, including performance, firm, people, process, style, customer service, tax efficiency and a composite score.
The goal? To identify finalists for each award in four separate categories: U.S. Equity Large-Cap; U.S. Equity Mid, Small, or SMID-Cap; International or Global Equity; and Fixed Income. The Awards Committee panel that chooses the winners in each category—and this year, an individual SMA Manager of the Year who stands out even among this already stellar crowd—includes Gib Watson, CIMA, the founder and long-term leader of Prima (and now Envestnet Vice Chairman); Cliff Stanton, CFA, chief research officer of Envestnet | Prima; and two members of the advisor press: myself, editor-in-chief of Investment Advisor, and Jamie Green, editorial director of the Investment Advisor Group of Summit Business Media.
The process of choosing the award winners is no casual affair, and the Prima analysts who present multiple managers for consideration in each category must defend their choices to the Awards Committee, using their quantitative skills but also their qualitative knowledge of the managers and their teams and the firms that employ them.
This year's award winners will be announced on May 1, 2013, at the 2013 Envestnet Advisor Summit in Chicago, including the announcement of that first-ever overall SMA Manager of the Year.
The finalists for this year's Separately Managed Account Managers of the Year, in alphabetical order, are:
U.S. Equity Large-Cap
BRC Investment Management LLC, based in Greenwood Village, Colo., for its Large-Cap Concentrated Equity product.
Robeco Investment Management Inc., based in Boston, for its BP Large-Cap Value strategy.
