Investment Manager Research – Why We Don’t Do It Alone

Investment Manager Research

Investment Manager Research – Why We Don’t Do It Alone

 Michael Karmin, CFA,®, CFP®, Wealth Advisor

At Strategic Wealth Partners, the primary focus of every engagement is to make sure that our clients are making appropriate progress towards their wealth goals. One critical component of fulfilling that obligation is for both us and our clients to have confidence that our investment philosophy and strategies are well-thought-out and appropriate. To assist us with this important process, we have chosen to engage in a relationship with an outside investment research consultant, Mercer. Mercer is one of the foremost institutional research firms worldwide and enjoys an excellent reputation in our industry. We work closely with Mercer and have asked them to challenge our thinking, and be available to research managers and for insight into prospective investment strategies.

CHALLENGE OUR THINKING

With decades of combined investment experience, we have a demonstrated level of expertise with investing concepts and strategies. But we of course realize that we are not going to be right all of the time. An important reason to work with an investment research consultant is to actually challenge what we think. This is relevant on many levels: portfolio construction, asset classes/categories, our use of specific managers, etc. From a macro perspective, Mercer provides advice to the investment committee on our strategic asset allocations, customized for various risk profiles within our client base. And from a micro level, they have experience and extensive staff resources to review specific asset classes and money managers. With an extensive database of managers, Mercer routinely provides helpful feedback on many levels.

MANAGER RESEARCH

One of the key services Mercer provides is to uncover potential issues with a manager. Besides the quantitative analysis we jointly conduct, Mercer is available to our firm to perform qualitative research on current or prospective managers. Among other things, Mercer is capable of evaluating investment theses and processes, looking for changes in key personnel, organizational structure or implementation strategies. This process of ongoing quantitative and qualitative analysis aims to allow for timely responses to changes that may impact the use of a manager.

INSIGHT INTO NEW MANAGERS AND STRATEGIES

Throughout the course of a year, many new managers will come across our desks. Some will inevitably look interesting and warrant consideration for inclusion in clients’ portfolios. But often, what looks compelling on the surface may not hold up under detailed scrutiny. To assess some of these opportunities, we leverage Mercer’s expertise to look beyond just performance numbers and to dig deeply into the investment managers’ discipline and value proposition. This is especially important for a newer vehicle (say, for example, a mutual fund) that is based on a historical track record from the same manager but using a different investment format. Mercer helps us determine which strategies are worthwhile to pursue. While we also review many new strategies ourselves, we find it very beneficial to have another set of experts with whom we can discuss a variety of issues.

OUR INVESTMENT COMMITTEE’S ROLE

Importantly, the decision to engage or terminate managers rests solely with our Investment Committee (the members of which are pictured below). We engaged the services of Mercer to help us fulfill our obligations to our clients, yet we retain the ultimate authority regarding which managers are employed. We believe that this relationship can result in better research than we might be able to perform solely on our own.

Disclosure:

This newsletter contains general information that is not suitable for everyone.  The information contained herein should not be constructed as personalized investment advice.  Past performance is no guarantee of future results.  There is no guarantee that the views and opinions expressed in this newsletter will come to pass.  Investing in the stock market involves gains and losses and may not be suitable for all investors.  Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.

Strategic Wealth Partners (“SWP”) is an SEC registered investment advisor with its principal place of business in the State of Illinois.  The brochure is limited to the dissemination of general information pertaining to its investment advisory services, views on the market, and investment philosophy. Any subsequent, direct communication by SWP with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.  For information pertaining to the registration status of SWP, please contact SWP or refer to the Investment Advisor Public Disclosure website (https://www.adviserinfo.sec.gov).

For additional information about SWP, including fees and services, send for our disclosure brochure as set forth on Form ADV from SWP using the contact information herein. Please read the disclosure brochure carefully before you invest or send money (https://www.stratwealth.com/disclosure-statement).

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