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How Active Managers Shine: Envestnet | PMC & Investment Advisor Asset Manager Awards

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Active managers met stiff competition in 2017 as the stock market marched upward, but this year’s volatility shows how quickly fortunes change and why active management still is needed to beat passive benchmarks.

Because many advisors don’t have the resources to find “the hidden gems in the active manager universe,” they turn to outside research teams to do the deep dives, says Tim Clift, Envestnet|PMC chief investment strategist.

Further, finding the top managers entails more than evaluating performance and risk-adjusted metrics, Clift says. It also means looking at the dynamics of the overall team, how these managers are compensated as well as incentivized, and ultimately determining their alpha thesis.

“That is, what is it they believe they can do that others can’t, what edge do they have that is different, and which ones will have the potential to perform well in the future?” Clift asks, adding that Envestnet|PMC generally focuses on products that are broadly available to advisors and their clients.

This year’s 14th annual Envestnet|PMC & Investment Advisor Asset Manager Awards recognize those active managers in different asset classes who have topped the benchmarks, have shown solid performance throughout the years and are best of breed in their respective categories.

As in past years, the selection committee includes Envestnet|PMC executives and Investment Advisor editors, who choose the top managers — this year in six asset categories, as well as an overall manager of the year.

The list they go through has been taken from a universe of hundreds of managers researched by Envestnet analysts, who also have met with many of them and combed over both performance and governance factors to present their top choices. The manager of the year is selected from the winners of all the asset categories.

A New Name for the Awards This year, the name of the honors has been changed to Asset Manager Awards from SMA Awards to encompass a wider area for judging and talent, including mutual funds, for instance, Clift says.

Some managers, particularly in the strategist class, might use ETFs and mutual funds as part of their active asset allocation practices, he points out: “It’s an evolution of the markets, and we want to reflect that in the awards we are looking at.”

This year’s award winners will be announced and honored during the Envestnet Advisor Summit held in New Orleans May 16-17. Winners also will be profiled in the July issue of Investment Advisor, and a special area will be devoted to this content on — including video interviews and other highlights from the conference.

As in the past, this year there will be two U.S. equity large-cap and two U.S. equity small-, small/mid- or mid-cap winners. There also will be one winner each in the international/global universe, fixed income, strategist and impact investing categories.

“One area we get a lot of interest in is the strategist area,” Clift says. “This group is more outcome oriented and has goals-based solutions, rather than just strict, direct benchmark targeted single-solution strategies. The industry is moving more toward goals-based solutions.”

The strategist class and impact class, which focuses on the ESG/SRI products, have been added within the last few years to reflect changes in the industry, he points out.

In addition, technology is influencing the asset-management business in several different ways — affecting both how managers conduct their research and ultimately how they operate, Clift explains.

“There’s a term in the industry called ‘quantamental,’ which is mixing more quantitative or technology-based research with traditional human-based thinking,” he says. “Any time you can get more data and can better crunch numbers using technology, you’re just going to make smarter decisions. We see this with managers themselves, who are leveraging technology to help them with the investment process.”

How We Choose the Asset Manager Award Finalists & Winners For 14 years, Investment Advisor and Envestnet|PMC have partnered to find, select and honor asset managers in multiple categories.

The selection process begins with the Envestnet team of analysts, who research each category for best-in-class managers by using several metrics as well as meeting with most management teams to trim down the list of finalists; each category can start with 20 to 100 managers.

The analysts make detailed presentations on their top choices to the selection committee. This year, the group was comprised of Envestnet|PMC Chief Investment Strategist Tim Clift; Managing Director Erik Preus, CFA; Investment Advisor Editor-in-Chief Janet Levaux and Executive Managing Editor Ginger Szala, who deliberated and voted on the winners.

The committee relies heavily on the research and due diligence expertise of the Envestnet|PMC analysts. These analysts know the asset managers and their teams personally and visit their offices, in addition to collecting and analyzing each manager’s performance numbers and key indicators like market upside and downside capture.

Envestnet|PMC’s proprietary systematic and multi-factor methodology evaluates managers on both qualitative and quantitative criteria, including investment process and style, performance, firm profile, customer service and tax efficiency.

To be considered for an award, a manager’s team must have at least three years of experience running a strategy with $200 million or more in assets.

After Envestnet|PMC’s analysts present their recommendations, providing performance data, governance structure and other underlying information, the selection committee exchanges opinions and picks the winners.

2018 Asset Manager Award Finalists

U.S. Large-Cap Equity • Boston Partners, Large-Cap Value • Brown Advisory, Large-Cap Growth • Dana Investment Advisors, Large-Cap Core • Wakefield Asset Management, Large-Cap Core

U.S. Small- and Mid-Cap Equity

• Baird Funds, Mid-Cap Growth • Copeland Capital Management, Small-Cap Dividend Growth • Kayne Anderson Rudnick, Small-Cap Sustainable Growth • Earnest Partners, Mid-Cap Core

International/Global Universe • WCM Investment Management, Quality Global Growth • Causeway, International Value • ClearBridge Investments, International Growth

Fixed Income • GW&K Investment Management, Enhanced Core Bond • Nuveen Asset Management, Intermediate-Term High Quality Muni Bond

Impact • Boston Common, International Equity SRI • ClearBridge Investments, Large Cap Growth ESG Strategy

Strategist • American Funds, American Funds Model Portfolios • Horizon Investments, Goal Based Solutions • JA Forlines Global, Global Tactical Portfolio Solutions • RiverFront Investment Group, ETF Portfolios


Ginger Szala is executive managing editor of Investment Advisor and the former editor-in-chief of Futures Magazine Group.


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