Page 35 - Investment Advisor July/August 2022

Multi Asset Strategist Manager of the Year

SSI Investment Management
SSI Flexible Allocation Portfolio

he ability to capture trends through
T tactical positioning led to solid abso-
lute and risk-adjusted performance last
year for SSI Investment Management’s
SSI Flexible Allocation Portfolios, an all-
ETF portfolio that won Envestnet’s 2022
Asset Manager of the Year Award in the
Multi Asset Strategist category.
The boutique firm’s 12-member port-
folio management team, working togeth-
er for more than two decades, uses a
combination of fundamental analysis and
quantitative research to generate consis-
tent performance as they pursue broad Ken Raguse income side resulted in exposure to
market upside and protection against Title: Manager several differentiated asset classes and
downside risks, Envestnet analysts note. significantly less interest rate sensitiv-
All three SSI Flexible Allocation Years with firm: 27 ity — duration — than the Bloomberg
Portfolios — conservative, moderate and Years in financial services: 30 Aggregate Bond Index,” he said.
moderately aggressive — outperformed SSI’s flagship moderate portfolio
their Morningstar peer groups in 2021, returned 17.17% last year, landing in
with the conservative and moderate Investment/asset class: the 11th percentile of its peer group,
portfolios also significantly surpassing Multi Asset Strategist as represented by the Morningstar
their benchmarks. Asset management firm: Allocation — 50% to 70% Equity catego-
A focus on U.S. equities, an under- SSI Investment Management ry, which includes 569 portfolios, Raguse
weight to core fixed income, and diver- Year firm founded: 1973 said. The moderate portfolio’s bench-
sification in high-yield securities and mark, 60% S&P 500 / 40% Bloomberg
bank loans, contributed to last year’s Number of employees: 30 U.S. Aggregate Index, returned 15.86%
success, Envestnet noted. AUM as of April 30, 2022: in 2021, while the Morningstar peer cat-
Portfolio manager Ken Raguse said $2.3 billion egory returned 13.06%, he noted.
the team combines risk management and This differentiated positioning on
flexible allocation strategy in a process the fixed income side added to alpha,
that reduces risk based on the environment or increases risk to Raguse said. The team replaced portions of traditional fixed
take advantage of opportunities, he added. income, such as U.S. Treasuries and investment-grade bonds,
While their quantitative model is a big driver of their asset with the First Trust Senior Loan ETF, which returned 3.9%
allocation, SSI’s fundamental analysis proves important as in 2021, and the FPE, or First Trust Preferred Securities and
well, Raguse said. In 2021, the quantitative model remained Income ETF, a floating preferred investment, produced a 5.2%
positive toward equity markets and the fundamental portfolio return last year, Raguse explained.
management team maintained an equity allocation above the He described the team as constrained tactical managers.
benchmark throughout the year, Raguse said. “And by that, I mean, we’re not trying to make calls on
With the equity market generating strong returns last year, market bottoms or market tops. It’s a very disciplined process
“managing the fixed income portion of the portfolio was more that adjusts systematically over time. So what we’re doing is
challenging,” Raguse said, noting the S&P 500 produced a looking at the quantitative output, taking that output as a team
28.7% return while the Bloomberg U.S. Aggregate Bond Index fundamental and evaluating it, and then adjusting the portfolio
return was down 1.7%. systematically over time. And as the environment changes, if
“The fixed income portion of SSI’s Flexible Allocation there’s substantial changes in the environment, there will be
Portfolios outperformed the benchmark and generated posi- big changes in the portfolio, but it’s a predictable, consistent
tive returns in 2021. SSI’s active approach on the fixed process that can be repeated over time.” — DWB

JULY/AUGUST 2022 INVESTMENT ADVISOR 33