Advisors are good at many things, but they're not good at all things. Even those who have long specialized in a particular asset class or who are stock pickers or build their own models need to call on the expertise of money managers who spend all day, every day monitoring the markets and building portfolios.
That's why for the 10th straight year Investment Advisor has partnered with Envestnet | PMC (in prior years with its predecessor, Prima Capital, before its acquisition by Envestnet in 2012) to research, identify and judge those managers in the separately managed account space who we deem to be outstanding. The winners will be named during Envestnet's Advisor Summit in Chicago on May 15 and will receive extended coverage both online at ThinkAdvisor.com and in the July issue of Investment Advisor.
We name SMA Managers of the Year in the domestic large-cap and small-to-mid-to-SMID-cap space. We honor managers in the international and global space. We name managers in fixed income, taxable and munis, and, in the years when appropriate, we give a specialty award for those portfolios that don't comfortably fit into one of the standard categories. Finally, from the winning managers we name a single SMA Manager of the Year who we believe is an exemplar of investment management excellence.
The process takes months and much time and effort from Envestnet | PMC's analysts, who are experts not just on each asset class but on the specific managers operating in that class. They present their findings to the awards committee, which consists of Envestnet | PMC researchers and executives, and Investment Advisor editors.
While performance is an important element in the awards committee's deliberations, there are additional quantitative and qualitative measures used to judge these managers. To begin, we're not interested in a one-trick-pony strategy or a "star" manager: Instead, we look to honor teams whose alpha strategies are sustainable and repeatable and that a broad range of advisors can access on multiple platforms. Specifically, we exclude strategies that are closed to new investors and will consider only those strategies that:
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Report to the PrimaGuide research application
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Have at least $200 million in assets
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Have tenured management, i.e., of at least three years running the strategy
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Rate highly according to Envestnet | PMC's due diligence process
To determine candidates for the awards, the analysts use Envestnet | PMC's own systematic multi-factor manager evaluation methodology, which combines both quantitative and qualitative criteria. Those criteria include: performance (not just the last year but over time); the firm (how important the strategy is to the overall investment firm); people (what is the background of the managers and who makes final decisions on the portfolio?); process (is it clear, sustainable and repeatable?); style (do the managers hew closely to its advertised style?); customer service (are the managers approachable and responsive, especially to advisors?); tax efficiency (a hallmark of the SMA model); and a composite ranking.
The awards committee then delves into each proposed candidate, peppering the analysts with questions on each manager's portfolio composition, performance relative to its peers, which platforms the strategy lives on and even questions about the lead portfolio manager's age (to ensure that the strategy can prosper even without that lead manager). Votes are then taken to determine the winners in each category, whether a "specialty" award should be given in the current year and then to determine which one of the winning managers qualify as the premier SMA Manager of the Year.
The finalists for the 10th annual SMA Managers of the Year are (in alphabetical order):
U.S. Equity Large-Cap (two awards)
Dana Investment Advisors…..Large-Cap Equity
Golden Capital Management…..Large-Cap Core
Robeco Investment Management…..Boston Partners Large-Cap Value
Victory Capital Management…..Large-Cap Growth
U.S. Equity Mid-, Small- or SMID-Cap (two awards)
Glenmede Investment Management…..Small-Cap Equity
