Robert Miller Title: Managing Principal Years with present firm: 20 Years in financial services: 20 Investment focus: Downside First Focus
Asset Management Firm: Frontier Asset Management Firm’s headquarters: Sheridan, Wyoming Year firm was founded: 2000 Number of employees and/or partners: 40 employees, 4 partners Assets under management/advisement as of Dec. 31, 2018: $3.37 billion
The benefits of having access to open space and being a long way from Wall Street seem to have paid off for Sheridan, Wyoming-based Frontier Asset Management, winner of the Strategist and Overall Asset Manager of the Year awards for 2019.
“We started the firm in August of 2000. There were two of us at that time, [my uncle] Gary Miller and myself,” said Robert Miller, CFA.
Driving Frontier’s growth, Miller explains, has been its focus on risk management: “We’ve really wanted to look at how clients and advisors perceive risk and make that … the overarching principle of how we manage money.”
While focusing on risk and the tradeoff for return, he adds, the team works hard to avoid “getting captured on the return side, which then lets the portfolio go anywhere … and can get clients into trouble by taking too much risk unknowingly,” he adds.
According to Envestnet, Frontier’s portfolio managers “analyze risk, return and correlations to help drive dynamic asset allocations,” and its “relative outperformance has been consistently driven by both active asset allocation and active manager selection.”
Since the firm launched the Frontier Globally Diversified Strategies, it has outpaced its respective blended benchmarks 85% of the time, on average, over rolling three-year time periods.
A team approach lies behind this success, according to Miller. “Gary and I, along with Jeremy van Arkel, … had worked together in previous firms. It was … a great reunion of us coming back together to do something that we thought was needed in the industry.”
Plus, the size of Frontier’s investment staff is similar to the size of its sales staff. “That’s rare,” he said. “Every decision we make is based on investments, not necessarily what … will be the best in the marketplace but what we feel is really right for the client.”
Frontier manages its strategies with a downside target. The balanced portfolio, for instance, has a downside target of 10%. “We don’t want to lose more than 10% over a 12-month time period, so that that really decides what can be in the portfolio and what can’t,” Miller said.
The firm’s downside-first focus “is what’s really appealing to advisors,” he explains. “The biggest picture with advisors is helping their clients. If they’re in the right strategy and they stay in that strategy, they’ll be successful getting to their goals. It’s when they have to move strategies or they weren’t expecting the volatility … that clients get themselves into trouble.”
The team also emphasizes “manager match,” which means “finding active managers that outperform after we hire them,” according to the portfolio manager.
“There are lots of studies that say it’s really hard to find [these] active managers. We’ve got a track record of being able to do that… [It’s about] who’s going to outperform in the future … and how you put them together,” Miller explained.
“We’ve built an optimization process that looks at millions of combinations … to come up with what we think is the best portfolio to outperform a set … asset-allocation mix,” he said.
Putting good active managers together “is the hard part,” according to Miller. “And over the last 20 years, this has been where a lot of the value frontier has been.” Frontier’s active managers created almost 2% of added value for the portfolio in 2018, for example, he says.
Plus, while maintaining its conservative asset allocation, “We actually matched benchmarks on the way up [in the first quarter of 2019]; our active managers did very well … and have continued to do well.”
Videos of the award winners can be viewed here:
- How Top Asset Managers Stay Ahead of the Pack
- Top Asset Managers Share Market Outlooks, Strategies
- Envestnet Advisor Award Winners: Putting Principles Into Practice
Profiles of the individual award winners are found here:
- 2019 Asset Manager Awards: Brown Advisory, Large Cap Growth Strategy
- 2019 Asset Manager Awards: Federated Investors Strategic Value Strategy
- 2019 Asset Manager Awards: Baird Mid-Cap Growth Strategy
- 2019 Asset Manager Awards: Copeland Capital Management, Small Cap Dividend Growth Strategy
- 2019 Asset Manager Awards: WCM Focused Growth International ADR Strategy
- 2019 Asset Manager Awards: Westchester Capital Management, Merger Strategy
- 2019 Asset Manager Awards: Segall Bryant & Hamill, Short Term Taxable Bond Strategy
- 2019 Asset Manager Awards: Trillium Asset Management, All Cap Core Strategy
- Essential Advisor Award Winners of 2019