Among this year’s crop of notable fund managers are both industry veterans and relative newcomers. This allows for keen insight from managers with a wide range of experience.
Money Management Executive reached out to the 10 managers selected for our special report this year, as well as other nominees, for their take on key issues facing asset management companies.
What are the industry’s biggest challenges?
“Standing out in a crowded universe and providing innovative strategies are two of the biggest challenges facing asset management companies,” says Ben Phillips, EventShares CIO and manager of its U.S. Policy Alpha ETF (PLCY). “The growth of listed ETFs over the past few years continues to make it more difficult to find white spaces.”
He adds that innovation in this atmosphere is key. “We think investors benefit more from the launch of innovative strategies rather than the 5th technology fund focused on big data and automation,” he says.
Andrew Chorlton, Schroders' head of U.S. multi-sector fixed-income, and manager of its Hartford Schroders Tax-Aware Bond Fund (STWTX), also cites the challenge of an oversaturated ETF market.
“The growth in popularity of ETFs continues to increase the options available to investors and we have responded to that by having the strategy available in both traditional mutual funds and ETFs,” he says.
Petra Bakosova, Hull Tactical COO and manager of the Hull Tactical U.S. ETF (HTUS), cites concerns regarding an aging bull market. “Managers are starting to prepare for what might come next,” she says. “The challenge with that is they need to explain to clients that strategies that did extremely well over the last 10 years may not be the ones that will outperform in the next 10 years.”
“Big data tools greatly leverage the ability of humans to add value,” says Janet Johnston, manager of the TrimTabs All Cap US Free-Cash-Flow ETF.
Dana D’Auria, managing director of Symmetry Partners and manager of its Global Equity Fund, notes the ever-decreasing fees as the result of the rise of value-adding tech. “This is great news for the customer,” she says, “but it does challenge asset managers to continue to provide great due diligence and risk mitigation, maintain necessary regulatory protocols and deliver robust service.”
Andrew Szczurowski, who manages the Short Duration Government Income Fund (EALDX) at Eaton Vance, notes how unpredictable the overall financial markets landscape can be, making it difficult to track the next crisis that will affect asset management.
“It's never the bus you see that hits you, it's the one that you don't see,” he says. “So whatever the market's biggest fear is, it will inevitably be something different that has the biggest impact on markets. But the market impacting unknown unknowns are something my team is constantly searching for. “
How is new tech is changing operations?
“With 40-plus years of fixed income experience, the technology of today versus when I started is almost beyond belief,” says Jerry Paul, SVP of fixed income at Icon, and manager of its Flexible Bond Fund (IOBZX). “The ability to collect and analyze data is remarkable. At the same time, it can be overwhelming and result in paralysis by analysis for some. At Icon I tend to let others get caught up in the macro work, and focus on my bottom-up bond picking.”
Szczurowski also notes the extreme value of data access for asset management firms.
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These three bellwethers offer insight into the forces that will shape the investing landscape in the decade to come.
December 7 -
Although bigger may be better for the fund giants, passive strategies may be blurring the inherent value of securities.
December 4 -
Analysts are worried that flows to passive funds may create lockstep moves between shares, distorting the market.
November 29
“Access to data is something that is impacting every industry, whether you are a PM on a Fixed income fund, a pharmaceutical salesman or work in advertising, we all have more data at our fingertips than any of our predecessors,” he says. “There is essentially a new gold rush in 2019 occurring, but the most valuable commodity today is data. Harnessing and analyzing that data and determining what is relevant and what is irrelevant is where the challenge lies.”
“Outside of GSE reform, the most impactful variable in the agency MBS market will come from policy changes out of the Federal Reserve," says Andrew Szczurowski, manager of the Short Duration Government Income Fund at Eaton Vance.
Phillips notes that two specific areas touched by tech at his firm are marketing and compliance. “Hubspot, a marketing automation firm, helps us manage content generation and distribution,” he says. “Smartsheet helps us automate compliance activities. [Both of them] allow us to focus on our value-added services.”
Janet Johnston, manager of the TrimTabs All Cap US Free-Cash-Flow ETF (TTAC), concurs. “Big data tools greatly leverage the ability of humans to add value,” she says. “Human judgement is still paramount.”
Matt Toms, CIO, fixed income at Voya, and manager of its Voya Strategic Income Opportunities Fund (ISIAX), has a different take on the tech effect. “The world has lost its patience,” he says. “Or perhaps more appropriately, technology has disrupted our relationship with waiting.
“A long-term investment mindset used to mean you thought beyond the quarter,” he adds. “Now ‘long-term oriented’ seems to mean you think beyond next Tuesday.”
What regulations are you watching?
“Over the years, there has been a consistent push for better disclosure from issuers in the muni market to the buy side,” says Ben Barber of Goldman Sachs Asset Management, who manages its Dynamic Municipal Income Fund (GSMIX). “But it really hasn’t made much significant progress over many years.”
However, he notes, there is a recent change to disclosure SEC Rule 15c2-12 that may be a real positive for the industry. “Issuers are now required to disclose within 10 days a bunch of different things, including other obligations outside of muni bonds, like bank loans or other commitments, as well as defaults and changes to financial covenants that could affect bondholders.”
Health category funds dominated the list, making up for well over half of the group’s assets.
He notes that the change could be a positive for both muni investors and managers, because if investors are feeling more comfortable about the clarity and timeliness of disclosures, “ultimately, that should lower the borrowing costs for issuers.”
Szczurowski says, “Outside of GSE reform, the most impactful variable in the agency MBS market will come from policy changes out of the Federal Reserve.”
Bob Kaynor, director of research at Schroders and manager of the Hartford Schroders US Small/Mid Cap Opportunities Fund (SMDIX), references the continued impact of MiFID II. “We see buy-side research budgets being squeezed and smaller independent research companies are feeling the effects and, in some cases, fighting for survival,” he says.
Read on for more about all 10 of this year’s asset managers to watch, in alphabetic order.
Name: Petra Bakosova
Fund: Hull Tactical U.S. ETF (HTUS)
Fund AUM: $57 million
Total Returns:
- YTD: 7.80%
- 1-year: 0.30%
- 3-year: 5.30%
- 5-year: N/A
Petra Bakosova joined Hull Investments in 2014 and worked on projects for its proprietary trading firm, Ketchum Trading, before transferring to its quantitative asset management unit, HTAA. Her background is in algorithmic trading across multiple asset classes, mathematical modeling and risk management. Bakosova began her career in quantitative finance at Arbhouse, as the company's first strategist.
Prior to Hull Investments, Bakosova worked on stock market indices modeling during her tenure as a quantitative researcher at Toji Trading Group. She holds a Master of Science in Financial Mathematics from the University of Chicago. She pursued her undergraduate studies in applied mathematics at the Comenius University in Bratislava, Slovakia, and Halmstad University in Halmstad, Sweden.
Name: Ben Barber
Fund: Goldman Sachs Dynamic Municipal Income Fund (GSMIX)
Fund AUM: $3.9 billion
Total Returns:
- YTD: 1.38%
- 1-year: 4.51%
- 3-year: 3.38%
- 5-year: 3.82%
Ben Barber, co-manager of the Goldman Sachs Dynamic Municipal Income Fund alongside Managing Director Scott Diamond, is the head of Goldman Sachs Asset Management's municipal bond portfolio management team in its global fixed-income group. Barber, who joined the firm in 1999, was named managing director in 2004.
At Goldman, the 28-year asset management veteran focuses on strategies and objectives for municipal separately managed accounts in its private wealth management division, as well as a wide range of municipal mutual funds.
Prior to Goldman Sachs, Barber spent eight years at Franklin Advisers, from 1991 to 1999. There he was a research analyst and portfolio manager for the firm's high-yield municipal and municipal bond funds.
Name: Andrew Chorlton
Fund: Hartford Schroders Tax-Aware Bond Fund (STWTX)
Fund AUM: $216.2 million
Total Returns:
- YTD: 1.93%
- 1-year: 4.00%
- 3-year: 2.82%
- 5-year: 4.26%
Andrew Chorlton is a co-portfolio manager for the Hartford Schroders Tax-Aware Bond Fund. He leads the team responsible for multi sector portfolios, including value portfolios. Chorlton joined Schroders in 2013 following the firm's acquisition of STW Fixed Income Management, where he worked since 2007 and served on the board of directors.
At STW, Chorlton was principal, portfolio manager and a member of the team responsible for managing $11 billion in multi-sector portfolios, including core, long duration, short duration and tax-aware strategies. Prior to that, he spent six years as a senior fixed-income manager at AXA Investment Managers. He earned a Bachelor of Social Sciences in Economics and Spanish from the University of Birmingham. He holds the CFA designation.
Name: Robert Kaynor
Fund: Hartford Schroders US Small/Mid Cap Opportunities Fund (SMDIX)
Fund AUM: $1 billion
Total Returns:
- YTD: 13.60%
- 1-year: 1.51%
- 3-year: 12.29%
- 5-year: 9.01%
Robert Kaynor joined Schroders as a senior equity analyst in 2013 and became research director in 2014. He is co-portfolio manager with Jenny Jones for the Hartford Schroders US Small Cap Opportunities and Hartford Schroders US Small/Mid Cap Opportunities funds. Effective April 1, Kaynor will be the Head of US Small and SMID Cap Equities and will be the lead portfolio manager on the fund.
Kaynor began his investment career in 1994 when he joined RCM Capital as an analyst and assistant portfolio manager. There he worked on a domestic long-only small-cap product, recommending and covering equities. Prior to Schroders, Kaynor was CIO and managing member at Ballast Capital, which involved managing a fundamental long/short portfolio.
Name: Janet Johnston
Fund: TrimTabs All Cap US Free-Cash-Flow ETF (TTAC)
Fund AUM: $123.2 million
Total Returns:
- YTD: 12.93%
- 1-year: 1.27%
- 3-year: N/A
- 5-year: N/A
Janet Johnston is a portfolio manager at TrimTabs Asset Management and co-manager of two ETFs: US All-Cap Free Cash Flow and International All-Cap Free Cash Flow. Johnston joined TrimTabs as portfolio manager in May 2017.
Prior to that, Johnston was managing her family's premier timber and hunting business. In addition, Johnston was an ETF Advisor from 2012 to 2015 and a managing partner from 2011 to 2012 at Madrona Partners.
She was a senior portfolio manager and SVP for Avatar Associates from 2010 to 2011.
Johnston holds a Bachelor of Science in Agricultural Economics from the University of Georgia and is a CFA charterholder.
Name: Matthew Moberg
Fund: Franklin DynaTech Fund (FKDNX)
Fund AUM: $6.7 billion
Total Returns:
- YTD: 17.41%
- 1-year: 10.58%
- 3-year: 24.18%
- 5-year: 13.26%
Matthew Moberg, co-manager of the Franklin DynaTech Fund with Franklin Templeton veteran Rupert Johnson Jr., originally joined the firm as an intern with Franklin Advisers in 1998. In the year following his internship in 1999, Moberg became a full-time equity analyst at the firm, where he specialized in research analysis of the internet, media, software and gaming.
Prior to joining Franklin, Moberg was an auditor and consultant at Coopers & Lybrand, where he specialized in the banking and finance industries. He earned his Bachelor of Arts in history from Washington & Lee University and an MBA from the University of Michigan's Stephen M. Ross School of Business. He studied accounting at the University of Southern California.
Name: Jerry Paul
Fund: Icon Flexible Bond Fund (IOBZX)
Fund AUM: $128.5 million
Total Returns:
- YTD: 2.49%
- 1-year: 3.55%
- 3-year: 4.51%
- 5-year: 3.26%
Jerry Paul is SVP of fixed income at Icon, and portfolio manager of the Icon Flexible Bond Fund and co-portfolio manager of the Icon Risk-Managed Balanced Fund. Paul was named Morningstar's Fixed-Income Manager of the Year for 1999 while he managed high-yield bonds for Invesco. Paul's professional investment experience includes over 40 years in fixed-income portfolio management and research.
Prior to Icon, Paul's career spanned several roles, including SVP of Invesco's funds group; SVP, director of fixed-income and portfolio manager at Stein Roe & Farnham; and vice president of investments at Century Life of America. Paul also founded Quixote Capital Management, a boutique firm focused on merger arbitrage.
Name: Ben Phillips
Fund: EventShares U.S. Policy Alpha ETF (PLCY)
Fund AUM: $19.4 million
Total Returns:
YTD: 13.50%
1-year: 1.70%
3-year: N/A
5-year: N/A
Ben Phillips, CIO at EventShares, is responsible for overseeing portfolio management for advisor clients. Phillips, based in the firm's Newport Beach, California office, chairs the EventShares investment committee for all fund launches.
Prior to joining the firm, Phillips worked for Goldman Sachs Asset Management, where he had portfolio management responsibilities for high-yield, convertible and leveraged loan investments across several multi-sector total return funds. Before GSAM, he held senior investing roles at Providence Equity Partners and Lord Abbett.
Phillips is a CFA charterholder and received an MBA and Bachelor of Science in business administration accountancy in finance from the University of Missouri.
Name: Andrew Szczurowski
Fund: Eaton Vance Short Duration Government Income Fund (EILDX))
Fund AUM: $3.5 billion
Total Returns:
- YTD: 0.63%
- 1-year: 2.23%
- 3-year: 2.27%
- 5-year: 1.92%
Andrew Szczurowski is the vice president of Eaton Vance Management and a portfolio manager on Eaton Vance's global income team. In addition to his role as manager of the Short Duration Government Income Fund, which he has overseen since 2014, Szczurowski is responsible for buy and sell decisions, portfolio construction and risk management for the firm's mortgage-backed securities strategies.
Szczurowski, who began his career in investment management in 2005, was an affiliate with BNY Mellon prior to joining Eaton Vance in 2007. He has a Bachelor of Science from the Peter T. Paul College of Business and Economics at the University of New Hampshire. He is member of the CFA Society of Boston and is a CFA charterholder.
Name: Matt Toms
Fund: Voya Strategic Income Opportunities Fund (ISIAX)
Fund AUM: $1.3 billion
Total Returns:
- YTD: 2.72%
- 1-year: 3.39%
- 3-year: 5.18%
- 5-year: 3.76%
As CIO at Voya Investment Management, Matt Toms leads a team of over 100 investment professionals. Prior to becoming CIO, Toms was the head of public fixed income at Voya Investment Management, overseeing the investment teams responsible for investment grade corporate debt, high-yield corporate debt, structured products, mortgage-backed securities, emerging markets debt and money market strategies for the firm's general account and third-party business.
Before joining the firm, Toms worked with Calamos Investments on establishing and growing its fixed-income business. Before that he had experience at Northern Trust and Lincoln National in both public and private corporate markets, as well as across multi-sector and global bond portfolio management.
