An obvious and oft-asked question after announcing the SMA Managers of the Year is how, exactly, they were chosen?
Investment Advisor and AdvisorOne have teamed with Denver-based research firm Prima Capital in each of the past eight years to honor the best separately managed account managers in multiple categories. Prima, whose planned acquisition by Envestnet was announced in February (closing of the deal is expected in April; see the June 2011 cover story for more about Envestnet), looks for repeatable and sustainable processes in the products and managers they consider as candidates for this annual honor.
The products must report to the PrimaGuide research application, have at least $200 million in assets and have tenured management of at least three years. Products and managers must rate highly according to Prima’s due diligence process, which uses a proprietary, systematic, multifactor manager evaluation methodology that combines both quantitative and qualitative criteria. There are 13 factors that the Prima analysts consider before recommending the finalists for SMA Managers of the Year, including performance, firm, people, process, style, customer service, tax efficiency and composite.
The goal? To identify two finalists for each award, with one of the finalists being recognized as the primary recommendation.
A decision-making committee comprising Prima executives and researchers, as well as Investment Advisors editorial staff, is then convened to decide the winner in each category based on the criteria described above.
The categories are: Large-Cap U.S. Equity Manager; Mid-Cap U.S. Equity Manager; Small-Cap U.S. Equity Manager; International or Global Manager; Taxable or Tax-Exempt Fixed Income Manager; and Specialty Manager, which involves a specialty stock, dividend strategy, opportunistic alpha manager, all-cap, go-anywhere or tax-aware strategy.
Unfortunately, no one qualified for the Specialty Manager category this year, but fortunately, two competing firms in one category were so close in the outcome of Prima’s due diligence process that both were awarded the prize. It was just one of many pleasant surprises to come from this year’s crop.