In Chicago Thursday morning at the 2014 Envestnet Advisor Summit, Investment Advisor and Envestnet|PMC announced the winners of the 10th annual SMA Managers of the Year.
Throughout the awards’ history, analysts from Envestnet (originally Prima Capital before its acquisition and rollup into Envestnet | PMC in 2012) and editors from Investment Advisor looked beyond each SMA strategy’s one-year returns to find those that consistently outperform their peers over time, following a clearly defined, sustainable and repeatable alpha strategy. With seven total award winners in five categories, and an overall SMA Manager of the Year, we honor strategies that are an important part of the firm’s overall corporate strategy, reflected in our assessment that the firm’s human capital can replicate that repeatable, sustainable investment strategy.
In our deliberations, we consider only those strategies that:
- report to the PrimaGuide research application
- have at least $200 million in assets
- have tenured management, i.e., of at least three years running the strategy
- rate highly according to Envestnet | PMC’s Due Diligence Process, which combines quantitative and qualitative criteria including performance, the firm, people, process, style, customer service, tax efficiency and a composite ranking.
Announced as SMA Managers of the Year in the U.S. Equity large-cap category this year is, first, Dana Investment Advisors for its Large Cap Equity portfolio. In the selection committee’s deliberations, PMC’s analysts noted that Brookfield, Wis.-based Dana’s “alpha generation has been extremely consistent over time,” helped by the fact that lead portfolio manager Duane Roberts has managed the strategy since its July 1999 inception. What sets them apart? Their sector-neutral, extremely structured process.
The second winner in the U.S. equity large cap category is Robeco Investment Management for its Boston Partners Large Cap Value portfolio.
In assessing Los Angeles-based Robeco for its Large Cap Value strategy, PMC’s analysts highlighted the minimal turnover on this firm’s research team of 20 experienced analysts, and the portfolio’s identifiable and sustainable competitive advantages: its clearly articulated alpha thesis and consistent alpha generation.
In the U.S. equity mid-, small or SMID-cap category, there were two winners as well. Philadelphia-based Glenmede Investment Management won for its Small Cap Equity portfolio. In assessing the product, one PMC analyst said simply that Glenmede “crushed it in 2013.” Led by portfolio managers Bob Mancuso and Chris Colarik, the strategy operates in a crowded area, making it even more impressive that its emphasis on buying quality companies has provided investors over the past 10 years with a product that has generated 181 basis points of annualized alpha.
The second winner in the category was Reinhart Partners for its Mid Cap Private Market Value strategy.
PMC’s analysts highlighted Reinhart’s unique investing process that helps pick names for the portfolio by assigning an intrinsic value to companies through finding comparable companies that were recently involved in a merger or acquisition. Lead portfolio manager Brent Jesko also eats his own cooking: all of his liquid worth is invested in the portfolio.
In the third category, international or global equity, Denver-based Cambiar Investors won for its International ADR product.
PMC analysts called Cambiar a “successful organization, with widespread equity ownership among employees, a stable and highly experienced team which focuses on a select number of related strategies” and has produced over its now eight-year-old strategy’s lifespan annual alpha of more than 2%.
The fourth category is that of fixed income, where Oklahoma City-based Tom Johnson Investment Management won for its Intermediate Fixed Income strategy.
In recommending Tom Johnson as a winner in this category, PMC’s analysts said it was the “most worthy candidate” in the category, considering its top-quartile three-year absolute performance and its top quartile three and five-year risk adjusted returns, and the firm’s commitment to the space: nearly a third of the company’s total assets are invested in this strategy.
The final category award — the Speciality award, which is given to a strategy that doesn’t fit into one of the major categories — was presented this year to Cushing Investment Management for its MLP Alpha Total Return Strategy.
In recommending Cushing, the PMC analysts said this SMA of master limited partnerships in the energy industry stands on the research conducted by its 18 analysts who assess not only each MLP’s growth prospects but its business model, strategic footprint and quality of management as well.
In the final award presentation, the overall SMA Manager of the Year, selected from among our category winners, was presented to Tom Johnson Investment Management for its Intermediate Fixed Income strategy. This award could only be won by a successful manager who stood out through overperformance over an extended period of time, exhibiting consistency in its alpha thesis and demonstrating a sustainable and repeatable investment process over multiple business and market cycles.
When discussing who should win this award, the committee was first impressed with the Tom Johnson product’s positive return in 2013, a dismal year for fixed income, but more notable was the product’s high performance over both the last three and five-year periods on both an absolute basis and on a risk-adjusted basis. The Committee also thought Tom Johnson worthy of praise for its “exceptional client service,” for its investment team’s extensive tenure together, and for the employee-owned firm’s culture.
Return soon to ThinkAdvisor for video coverage of the award winners, including individual interviews, and to Investment Advisor, where our July cover story will focus on these successful managers.
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