This is the ninth year that Investment Advisor, AdvisorOne and Prima Capital, now Envestnet | Prima, will have researched, nominated and chosen the best separately managed account managers in multiple categories.
Below, we name those strategies, in alphabetical order, chosen as finalists by the 2013 SMA Managers of the Year Awards Committee in the large cap equity category. This year, the winners of the SMA Managers of the Year honors in this category and the others 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 our 2013 SMA Managers of the Year home page for more information on the process, the finalists and, on and after May 1, the winners of this year’s awards.)
The outlook for the economy is sunshine and roses—at least that’s what some would have you believe.
“We have been and will continue to be extremely bullish,” Richard Bernstein, former chief investment strategist at Merrill Lynch and current CEO of Richard Bernstein Advisors, has said in a number of venues recently, echoing popular sentiment among investment managers. “This could be the greatest bull market of our lifetime. It could rival the bull market from 1982. It won’t be like that all over the world, but certainly here in the United States.”
It would be undoubtedly good for the domestic large-cap equity space, and many of this year’s Investment Advisor SMA Managers of the Year nominees, presented in partnership with Evnestnet | Prima, might agree with Bernstein in principle (if not degree), but the jury is still out. Sequester, debt and deficit, health care legislation, saber rattling across the globe, energy prices—it all adds up to uncertainty, to say the least, and yet each of the nominated firms continues to outperform.
Nominee 1: BRC Investment Management Large Cap Concentrated Equity
BRC Investment Management is the first nominee (alphabetically) in the large-cap category with a fascinating behavioral finance play; actually it’s in the firm’s name—”BRC” stands for Bounded Rationality Concepts. Like Wedgewood Partners below, BRC is no stranger to the lofty heights of the SMA Managers of the Year process, having won in 2012.
“Our strategy is to monetize irrational behavior,” John Riddle, BRC’s managing principal and chief investment officer, told us last year. “In that respect, Kahneman and prospect theory are very important to us.”
So how do they do it?
“We can’t produce economic forecasts better than the average of the experts, so we play in a different sandbox,” Riddle explained. “We instead concentrate on what we think changes the expectations of investors and institutions by focusing on the behavior of security analysts.”
Nominee 2: Robeco Investment Management BP Large Cap Value
The second nominee is the BP Large Cap Value product from Robeco Investment Management, which is lead managed by Mark Donovan (left), a founding partner of Boston Partners Asset Management and Robeco Investment Management’s CEO. The strategy employs a three-step process, according to Envestnet |Prima’s analysts, who recommended Robeco’s product to the 2013 SMA Awards Committee.
“[The first step is] quantitative scoring and screening; second, fundamental analysis and recommendation; and third, portfolio construction and maintenance,” the analysts said in their written recommendation. “The team starts by using quantitative disciplines to score over 6,000 stocks (generally greater than $3 billion in market cap) worldwide every day on a scale from one to 10 based on a weighted composite of their fundamentals, valuation and momentum using a proprietary rating system developed by the Boston-based quantitative group.”
Nominee 3: TCW Investment Management Co. TCW Concentrated Core (Large Cap Growth)
Is there life after Jeffrey Gundlach? TCW’s Craig Blum would certainly say yes, and it’s reflected in performance that earned the Concentrated Core fund strategy he manages a nomination in the large-cap category for the 2013 SMA Managers of the Year.
“TCW utilizes a multi-factor investment strategy designed to identify opportunities not fully reflected in stock market valuations such as superior business practices, long-term trend analysis and valuation,” according to Envestnet | Prima’s analysts in making the recommendation to the 2013 SMA Awards Committee. “Companies targeted for investment typically are those believed to have strong and enduring business models and defendable advantages over their competitors. They must also be companies positioned to benefit from secular trends.”
Nominee 4: Wedgewood Partners Large Cap Focused Growth
The category’s final nominated strategy, managed by David Rolfe and his team at Wedgewood Partners, is no stranger to the SMA Managers of the Year awards, most recently winning the 2011 SMA Manager of the Year.
“We’re big subscribers to the arguments put forth by Charles D. Ellis, author of ‘The Loser’s Game,’” Rolfe (left), chief investment officer of the St. Louis-based firm, told us two years ago.
“Instead of trying to time the markets and getting sucked into short-term volatility, we take a long-term view and let the markets work for us. Too many of our competitors try to do otherwise, and we refuse to play that loser’s game. That, quite simply, is our investing philosophy. ”
We invite you to return to the 2013 SMA Managers of the Year home page to read about the finalists in the other three categories; for additional and ongoing coverage of the winners, beginning on May 1; and for the awards ceremony.