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2013 SMA Managers of the Year Revealed at Envestnet Conference

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The 2013 SMA Managers of the Year were announced at Envestnet’s 2013 Advisor Summit Wednesday afternoon in Chicago.

Co-presenters Jamie Green, editorial director of the Investment Advisor Group of Summit Business Media, and Gib Watson, group president of Envestnet | Prima, noted that 1,600 managers were reviewed before picking the winners in four major categories, and that the “strategies not only had to be repeatable and sustainable, but also could be clearly articulated to advisors and clients.”

Green also noted that multiyear performance, rather than just one year’s performance, was considered.

— U.S. Equity Large-Cap Award

The first award in U.S. Equity Large-Cap went to Robeco Boston Partners for its BP Large-Cap Value strategy.

“The strategy is an excellent option for investors seeking a relative value large-cap manager, which we believe has identifiable and sustainable competitive advantages as well as a clearly articulated alpha thesis,” Green said in announcing the award. “The team’s alpha thesis is based on exploiting three market anomalies: the valuation anomaly, momentum anomaly and quality anomaly by using a systematic investment process that blends quantitative and fundamental analysis.

Green added that while several active managers seek to exploit these well-known anomalies, we do believe this team possesses an analytical edge with respect to consistently identifying attractively valued stocks with strong fundamentals, profitability and improving business momentum given the team’s deep experience as well as its disciplined process.

St. Louis-based Wedgewood Partners took home the second award, a repeat of a win in 2011, for its Large-Cap Focused Growth strategy.

“With respect to the team’s alpha thesis, it seeks to identify stocks that it believes are mispriced in the short term, as investors are often overly concerned with near-term events while this team is focused on the long-term sustainability of growth,” Watson said. “While the team’s alpha thesis is common amongst long-only active managers, the team does approach the large-cap growth space in a differentiated manner from the vast majority of its competitors.”

— U.S. Equity Small-, Mid- or SMID-Cap Award

Earnest Partners took home the third award for its Mid-Cap Core strategy.

“Like many long-only equity managers, Earnest believes valuation along with earnings growth will drive stock prices over a full market cycle and lead to relative outperformance over a passive index if such securities are overweighted in a diversified portfolio,” Green said. “However, unlike most managers, Earnest has built out a very unique investment team, which we believe is the firm’s edge and will be the driver of excess returns. Indeed, instead of hiring personnel with buy- or sell-side investment-related experience, the firm takes a different approach in hiring research analysts that have substantial real-world industry or sector-specific experience.”

For the fourth award, Boston’s GW&K Investment Management was recognized for the Small-/Mid-Cap Equity Strategy.

“The alpha thesis of the manager is that a portfolio of high-quality stocks will outperform the index over a full market cycle, where quality is defined as firms with tenured and quality management that are well positioned with strong products and services in attractive niche markets and have a distinct competitive advantage,” Watson said. “Their edge in implementing this strategy is a combination of the seniority of the senior members of the firm responsible for allocating capital, the fundamental analysis performed by Jeffrey Thibault and his team, and the focus on portfolio-level quality factor analytics, which is led by their director of research, Dan Miller (former CIO of Putnam special equity growth group).

— International or Global Equity Award

Thomas White International ADR took home the fifth award, which was also was a repeat of 2011.

“The investment universe includes several international companies,” Watson observed. “These stock are divided into approximately 100 valuation groups that include sectors by regions (e.g., consumer staples in Europe) and by countries (e.g., health care in Japan) and specific countries. In each valuation group, stocks are placed into deciles based on analytical factors that have been identified by the investment team as having significant predictive power based on results from single-factor models and an optimization process.”

— Fixed-Income Award

In a significant achievement, GW&K also took home the trophy in the fixed-income category for the second year in a row, for this year’s sixth award.

“The firm’s Enhanced Core Bond strategy combines top-down analysis to determine the overall sector allocation of the portfolio, and bottom-up fundamental research to select individual securities,” Green said. “The team begins its top-down approach with analysis of present economic conditions, focusing on current and secular inflation trends. This provides the foundation for the team’s view of the business cycle and its longer-term outlook for interest rates. GWK does not attempt to forecast short-term interest rates; instead, this macro assessment drives the allocation to both investment-grade corporate issues as well as high-yield corporate bonds.”

A new category, and the seventh award, included this year was then announced—the overall SMA Manager of the Year, which went to David Rolfe of Wedgewood Partners.

“I wish my mother was here,” he said to laughter. “She’d say she was proud, but not impressed. I humbly thank you on behalf of everyone at Wedgewood.”


We invite you to visit the 2013 SMA Managers of the Year home page to view profiles of these finalists and for additional and ongoing coverage of the winners and the award ceremony.