Last year's 27% return in the S&P 500 didn't come without some issues. Volatility kept investors nervous, especially as the Federal Reserve increased interest rates (with a promise of more hikes coming) and inflation seemed more entrenched than transitory.
"It was a challenging year because we had volatility and an aggressive Federal Reserve," Tim Clift, chief investment strategist of Envestnet | PMC, told ThinkAdvisor. "All those things combined were an opportunity for really good active managers to be able to select certain areas and avoid others. It was a much more dynamic and volatile year than we've typically seen."
This confluence of events heightened the competition for top managers in the 18th annual Asset Manager of the Year awards.
The yearly awards, presented by Envestnet | PMC and Investment Advisor recognize active managers in eight different categories who have beaten their benchmarks, shown solid performance in general over time and are the best in their respective asset class. An overall Manager of the Year for "embodying excellence in asset management" will be selected from these winners.
The 2022 finalists are listed below. Winners will be announced on May 11 during the Envestnet Advisor Summit, being held this year in Charlotte, North Carolina. The winners will be showcased in the July/August issue of Investment Advisor as well as in articles and videos on ThinkAdvisor.
This year brought not only growth in candidates from the 21,000 products on the Envestnet platform, but strong performance across the board. In fact, this year included a Specialty category, which hasn't had contenders since 2017.
"Specialty is a catchall for strategies that don't fall into the traditional asset classes that we've given awards to," Clift said. "But we did want to have a place to recognize outstanding managers that may be even more of a niche asset class, and not every year there are good options. So we make the call year by year. This year we actually had four [potentials]."
Big Trends
One of the newer categories is sustainable investing, which has had huge growth, Clift said, as "most companies have or are adopting some level of impact or sustainability in their businesses."
Sustainability assets have surged on the platform, Clift stated. "And the number of products available also has increased dramatically." He added that advisor interest has "also grown significantly."
Indeed, many of the managers selected in "traditional" categories actively participate in sustainability as well. In fact, "our research folks are asking every single manager whether this is part of their investment thesis, and it does weigh in on our investment decisions," Clift explained.
Another trend is the growth in smart beta investing, Clift said, "which has helped identify certain factors like value, momentum and quality that are supported by academic research, and then isolating them from a performance perspective, and then basically being able to bring the cost down on owning those factors."
Smart beta is part of a quantitative model, which means, says Clift, it's moved "our portfolio construction from active and passive, to active, smart beta and passive."
Also, a challenge to managers has been the concentration of mega-cap companies that have been driving index performance. For example, if large-cap managers didn't have a few of the largest tech companies in their portfolios, it would have dragged down returns relative to the market, Clift said.
