Among this year's crop of notable fund managers, a couple of key themes emerge: the importance of acclimating to rapidly shifting economic conditions and the challenges faced by active managers at a time when low-cost passive products are favored by many investors.
"Asset classes, global economies and governments are more connected than ever before," said Rick Singh, manager of the JPMorgan Opportunistic Equity Long/Short Fund. "What made us exceptional over the last five years will not be sufficient in the next five years. We must be adaptive to ever-changing market environments."
Singh is one of 10 managers selected by Money Management Executive for its annual list of managers to watch. Managers were chosen based on factors including long- and short-term fund performance in their specific categories, individual strategies and their length of time in the business. All funds considered were led by single managers.
The importance of preparedness for fluid market conditions was also noted by Catherine Stienstra, a senior municipal fixed-income portfolio manager for Columbia Threadneedle Investments.
"The market is constantly changing — supply, demand, tax rates, insurance, interest rates, pricing disclosure," Stienstra said. "Managers need to be fully staffed and resourced to understand and take advantage of the changing market environment."
The new tax law is one notable economic shift. In a March report, Moody's said asset managers who adjust their structures and investment strategies to align with the new law stand to benefit from the changes.
"The new tax provisions are largely positive for asset managers," explained Moody's analyst Rokhaya Cisse in the report. "From the decrease in the corporate tax rate to the adoption of a territorial system, the main beneficial provisions of the new tax law seem to offset the more negative provisions."
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Smart beta growth, fee wars and more attention to risk-management are key trends to watch, say six experts surveyed by Money Management Executive.
January 17 -
Commission staffers are probing how broker-dealers are handling ETFs and the extent to which investors understand the risks of the funds.
May 20 -
Industry experts offer their forecasts for leading trends in the coming year.
December 12
Said Stienstra, "Portfolio managers need to understand how tax reform may impact supply and demand, and then potentially identify and exploit different ways to structure a portfolio in an effort to deliver market-beating performance."
A 2018 lookahead report by Deloitte said asset management firms may face margin compression due to the rise of passive investing. As a result, active managers may need to make a strong case for alpha.
Jeffrey Sherman, manager of the DoubleLine Strategic Commodities Fund, advised, "As an active manager, if you are not providing a differentiated product or process, then you will be commoditized away by the technological advancement of the industry."
Noted Grant Engelbart, manager of AdvisorOne CLS Global Aggressive Equity, "No one seems to want to pay for active management, despite its potential benefits.
"However," he added, "as fees come down in active funds, their performance will look better."
Trump’s call for tariffs on steel and aluminum imports, and subsequent worries of a trade war, have recently taken a toll on emerging markets investments.
Robert Marshall-Lee, manager of the Dreyfus Global Emerging Markets Fund, explained that the rise of passive leads to "less price-sensitive market participants, which may lead to greater price swings away from fundamentals."
He added, "This allows the high-conviction active manager to benefit from such anomalies."
In January, inflows to passive U.S. equity funds were at $41.2 billion, while outflows from active U.S. equity funds hit $24.1 billion, according to Morningstar.
Serena Perin Vinton, portfolio manager of the Franklin Growth Fund, said, "It has been a challenging period for active, but I believe that portfolio managers who deliver superior risk-adjusted returns for their shareholders over the long term will see a return to favorable asset flows."
Jonathan Siegmann
Fund: Fidelity Select Defense & Aerospace Portfolio (FSDAX)
Fund AUM: $3.1 billion
Total Returns:
- YTD: 9.36%
- 1-year: 36.81%
- 3-year: 17.77%
- 5-year: 20.75%
Siegmann has worked as a research analyst with Fidelity Management & Research Company, the investment advisor for Fidelity's family of mutual funds, for the past six years.
Since 2015, Siegmann has focused on the aerospace and defense industry, and managed the firm's $1.6 billion Fidelity Select Defense and Aerospace Fund. Siegmann also focuses on industries including paper, packaging, wood products and chemical stocks.
Prior to his current position, which he took in 2012, Siegmann was a senior sector specialist in equity research at FMR from 2007 to 2012. He also held various commercial and operations roles at BASF, a European chemical producer.
Rezo Kanovich
Fund: Oppenheimer International Small-Mid Company Fund (OSMAX)
Fund AUM: $10.6 billion
Total Returns:
- YTD: 2.10%
- 1-year: 31.68%
- 3-year: 14.85%
- 5-year: 16.57%
Kanovich joined OppenheimerFunds' global equity team as a senior analyst in 2005. Since 2012 he has managed the firm's Oppenheimer International Small-Mid Company Fund.
In the span of six years, Kanovich helped the then-$950 million fund grow into one of the leading funds amongst its peers, with more than $10 billion in AUM. Kanovich's alpha over the past six years is nearly triple his peer group average.
Prior to OppenheimerFunds, Kanovich was an analyst with Boston Biomedical Consultants, an investment banker with Lehman Brothers' M&A team and a consultant with PwC. He holds an MBA in finance and health care systems from the Wharton Wharton School at the University of Pennsylvania.
Catherine M. Stienstra
Fund: Columbia Strategic Municipal Income Fund (INTAX)
Fund AUM: $1.2 billion
Total Returns:
- YTD: -1.14%
- 1-year: 5.18%
- 3-year: 3.31%
- 5-year: 3.49%
Stienstra, a senior municipal fixed-income portfolio manager at Columbia Threadneedle Investments, manages the firm's national short municipal bond, state-specific long municipal bond, high-yield municipal bond and strategic municipal income strategies.
Previously, Stienstra worked for U.S. Bancorp Asset Management as a senior fixed-income portfolio manager. In this position, she supervised the investment management of the tax-exempt custom cash institutional portfolios.
She also managed three state-specific bond products and a national short-term municipal product, and was a manager of three closed-end funds. Prior to U.S. Bancorp, she worked at Metropolitan Financial Mortgage.
Rick Singh
Fund: JPMorgan Opportunistic Equity Long/Short Fund (JOELX)
Fund AUM: $176.7 million
Total Returns:
- YTD: 1.72%
- 1-year: 11.56%
- 3-year: 6.71%
- 5-year: N/A
Singh is an executive director at J.P. Morgan Investment Management. He has been the portfolio manager of the JPMorgan Opportunistic Equity Long/Short Fund since 2013.
Today the fund has $176.7 million in AUM.
Prior to this, Singh served 3G Capital and Standard Pacific, a $3 billion hedge fund, as a partner and managing director. He was also a partner, managing director and research analyst at Karsch Capital Management.
Singh began his career at Salomon Smith Barney, as an investment banker in mergers and acquisitions. He has extensive investment experience. Singh holds a B.S. in commerce from the University of Virginia.
Emory W. Sanders Jr.
Fund: John Hancock Fundamental Large Cap Core (TAGRX)
Fund AUM: $5.2 billion
Total Returns:
- YTD: 1.33%
- 1-year: 13.68%
- 3-year: 11.32%
- 5-year: 13.49%
Sanders is a senior managing director, senior portfolio manager and co-leader of the U.S. core value equity team at John Hancock Asset Management. In this role, he manages the firm's large-cap value, large-cap core and all-cap core strategies.
Sanders specializes in the technology, consumer staples and industrials sectors. He has worked for the firm for seven years.
Prior to John Hancock, Sanders was a director, portfolio manager and senior equity analyst with the large-cap equity research team at Wells Capital Management. Before that, he served as an analyst with Evergreen Investments from 1997 to 2008. Sanders had been promoted to portfolio manager when he left the firm. He is CFA and a member of the Boston Security Analysts Society.
Grant Engelbart
Fund: AdvisorOne CLS Global Aggressive Equity (CLACX)
Fund AUM: $173.5 million
Total Returns:
- YTD: 0.83%
- 1-year: 17.13%
- 3-year: 9.54%
- 5-year: 11.05%
For the past five years, Engelbart has managed aggressive mutual funds and several ETF and mutual fund separate account strategies at CLS.
Engelbart also leads the alternative broad asset class team and serves on committees across the firm and its parent company, Northstar Financial Services.
Two years after his internship at CLS in 2007, he returned to the firm and held several roles in trading and investment research for five years. Engelbart began working at his current position with CLS in 2013. Prior to CLS, he worked for TD Ameritrade and State Street.
Engelbart's office is based in Omaha, Nebraska.
Jeffrey Sherman
Fund: DoubleLine Strategic Commodities Fund (DBCMX)
Fund AUM: $256.3 million
Total Returns:
- YTD: 1.19%
- 1-year: 9.31%
- 3-year: N/A
- 5-year: N/A
Sherman, deputy CIO and portfolio manager at DoubleLine Capital, leads the firm's Cross-asset Team and manages its DoubleLine Strategic Commodities Fund.
Sherman designed the portfolio structure for the SPDR DoubleLine Total Return Tactical ETF (TOTL) as a co-portfolio manager of the fund, the largest ETF in Morningstar's intermediate-term bond category, with more than $3.3 billion in assets.
Sherman has worked for the firm since 2009, with a focus on fixed income and real-asset portfolios.
He also assisted in developing real-asset strategies and overseeing commodity funds at the firm. Prior to this position, he was a senior vice president, portfolio manager and quantitative analyst at TCW.
Serena Perin Vinton
Fund: Franklin Growth Fund (FKGRX)
Fund AUM: $15.5 billion
Total Returns:
- YTD: 3.72%
- 1-year: 21.11%
- 3-year: 11.64%
- 5-year: 15.25%
Perin Vinton is a senior vice president with Franklin Equity Group and lead portfolio manager of the Franklin Growth Fund. She joined Franklin Templeton Investments in 1991.
She was an analyst and manager in the firm's international fixed-income group for four years. She moved to the Franklin Equity Group in 1995. Perin Vinton’s prior research responsibilities included analysis of consumer products, household goods and various sectors in the retail industry, such as apparel, footwear, textiles, paper, forest products, building materials and steel.
Perin Vinton earned her B.A. in business economics from Brown University. She is a CFA and a member of the CFA Institute.
Antonio Picca
Fund: Vanguard's U.S. Factor Fund Suite
Fund AUM: $67.3 million
Total Returns:
- YTD: N/A
- 1-year: N/A
- 3-year: N/A
- 5-year: N/A
Picca is a senior portfolio manager and head of factor-based strategies at Vanguard's quantitative equity group.
In this position, he is responsible for research and management for all the group's active factor strategies. Today he oversees a suite of factor funds, which launched on Feb. 15 and have $56 million in AUM. These funds include the Vanguard U.S. Minimum Volatility ETF (VFMV), Vanguard U.S. Value Factor ETF (VFVA) and Vanguard U.S. Momentum Factor ETF (VFMO).
Prior to joining Vanguard in 2017, Picca designed and implemented factor-based investment solutions at Dimensional Fund Advisors.
Robert Marshall-Lee
Fund: Dreyfus Global Emerging Markets Fund (DGEAX)
Fund AUM: $351.1 million
Total Returns:
- YTD: -5.77%
- 1-year: 26.75%
- 3-year: 7.31%
- 5-year: N/A
Marshall-Lee is head of the Emerging and Asian Equity team at the Newton Global Emerging Markets Fund.
Before he took his position as a fund manager for the global market, Marshall-Lee was an analyst specializing in a wide range of global industries across paper, steel, tobacco and utilities sectors.
Marshall-Lee, who now has 19 years of industry experience, began his career at Deloitte & Touche as a supervisor in the financial services practice for four years. Marshall-Lee holds both Associate Chartered Accountant and Associate of the Society of Investment Professionals qualifications.
All performance data from Morningstar Direct.
