It is both inspiring and humbling to say that we have now hosted 20 years of our annual Asset Manager Awards program. Our systematic, proprietary, and multi-factor methodology for this awards program harnesses a variety of qualitative and quantitative criteria to identify and narrow down finalists from among the thousands of strategies on the Envestnet platform. Our goal is to recognize high-conviction portfolio managers who:
- Go above and beyond for investors
- Elevate standards and best practices for the industry
- Posted outstanding performance in the most recent calendar year
After this year’s event, our team took a few minutes to reflect on how far we’ve come and what we’ve learned from the many impressive firms we’ve worked with over the last two decades.
Our qualitative and quantitative methodology
Each year we look at both qualitative and quantitative criteria to choose the award winners.
From a quantitative perspective, we’re looking for managers that outpaced their respective benchmarks in the most recent calendar year and also placed near the top of their peer group. Risk-adjusted performance is definitely considered, but for the Annual Asset Manager Awards we’re more focused on relative outperformance.
From a qualitative perspective, we gravitate towards managers that have a clearly defined “alpha thesis” (i.e. an inefficiency that they have identified and attempt to exploit along with an edge in doing so). We give high marks to managers that have:
- A well tenured and stable investment team
- A thoughtful risk management and portfolio construction processes
- A history of strong risk-adjusted performance
When these criteria are combined, they paint a picture of an asset manager who has truly honed their craft and is leading the industry.
An evolving industry
A lot has changed since we held the first awards 20 years ago. The awards were initially limited to SMA strategies, but as the wealth management industry has evolved—and with it product innovation—we’ve seen several new asset classes and product types become available to advisors/clients. For example, after the financial crisis we saw a lot of hedge fund strategies launch ’40 Act vehicles, and as that universe grew, we decided to recognize outstanding managers in that space.
Another example is the proliferation of professionally managed model portfolios that consist of mutual funds and ETFs (we refer to them as “Fund Strategist Portfolios” or “FSPs). Over the past 5-10 years we have seen more advisors adopt FSPs as a means to outsource investment due diligence, portfolio construction, and trading so that they can focus more time on creating and growing new client relationships. As a result, we have included FSPs as a category within annual awards.
The fundamentals stay the same
All of that said, we agreed that the fundamentals of excellence have stayed the same. One of the most consistent themes we’ve identified is the effectiveness of active management. Active management can be worthwhile. Year in and year out we see asset managers outperform their benchmarks and add value for their investors. With that said, there are some years where it works better than others (i.e. a higher number of managers outperform) due to market dynamics, which makes it all the more important to have a robust due diligence process and to understand who and what you’re investing in before allocating to a specific manager.
Looking ahead
Asset management will continue to evolve and the awards along with it. As the universe of active ETFs expands, we could imagine creating a new category. We could also see a potential new category for direct indexing managers that would focus more on things like customization capabilities and client service aspects.
The entire awards process is something that our team looks forward to every year. The collaboration between the research analysts and voting committee is rewarding because you are able to witness how passionate the analysts are about their finalist picks; it is essentially a way for them to draw attention to the fruits of their labor. The analysts go through an arduous process when conducting new manager searches and when their picks end up performing well enough to be considered for the overall Manager of the Year, it validates the whole process.
It's also very rewarding to draw attention to our asset management partners. These firms spend a lot of time and effort answering questions and providing information to our analysts so when we’re able to recognize them—and their performance— with the annual awards it’s always a powerful moment.
Please see our press release to celebrate our a full list of 2024 winners.
Save the Date for Elevate 2025 in Las Vegas, NV! Visit https://www.envestnet.com/event/elevate/ for the latest information.
