U.S. Money Masters of 2016
This year’s top money managers and investors were chosen because they know how to make sound decisions based on investment process and original thinking.
Spiros (Sig) Segalas isn’t about to let the volatility that has rocked markets in the past year influence him. Still, he admits to not being calm about it, either. “I run scared,” laughs Segalas, a growth-stock investor who co-founded New York–based Jennison Associates in 1969 and has one of the longest track records in the asset management industry. “You have to run scared.”
Segalas, who is CIO of Jennison (now owned by Prudential Financial), is worried about China’s slowing growth, the U.K.’s possible exit from the European Union, the sluggish U.S. economy and the uncertainty surrounding the upcoming presidential election. “I think the election is slowing our economy,” he says. “Companies will be careful about how they spend money until they see new rules. Of course, we’re influenced by this. I don’t dismiss it. All I know is we’d better be right on the companies we own.”
Segalas has long been right on the companies in which he invests. His investors don’t run scared; some of them have been with him for more than 40 years. That’s one reason he was chosen as Money Manager of the Year in our seventh annual U.S. Investment Management Awards. This year we also recognize David Booth, co-founder and co-CEO of Dimensional Fund Advisors, as our Manager Lifetime Achievement award winner and Peter Gilbert, former CIO of Lehigh University and the Pennsylvania State Employees’ Retirement System, as our Investor Lifetime Achievement award honoree.
We also recognize the top money managers in nearly 40 asset classes. The selection process began by screening managers using data from Atlanta-based eVestment to find those with long track records of delivering top risk-adjusted returns. We then asked the CIOs of pension funds, endowments, foundations and other institutions to rank the three managers in each asset class who demonstrated the best overall performance in the past year, based on factors like investment process and original thinking. The winning firms are listed in the table below.
2016 U.S. Investment Management Award WinnersLarge-Cap Core EquityJ.P. Morgan Asset MgmtLarge-Cap Growth EquityFidelity InvestmentsLarge-Cap Value EquityBrandywine Global Investment MgmtMidcap Core EquityJacobs Levy Equity MgmtMidcap Growth EquityArtisan PartnersMidcap Value EquityWells Capital MgmtSmall-Cap Core EquityPrincipal Global EquitiesSmall-Cap Growth EquityWilliam Blair Investment MgmtSmall-Cap Value EquityAllianceBernsteinCash MGMT And Enhanced Cash MGMTWestern Asset Mgmt Co.Core Fixed IncomeLoomis, Sayles & Co.Core Plus Fixed IncomeDoubleLine CapitalCorporate Fixed IncomePacific Investment Mgmt Co.Floating-Rate Bank Loan Fixed IncomePineBridge InvestmentsGovernment Fixed IncomeFederated InvestorsHigh-Yield Fixed IncomeColumbia Mgmt Investment AdvisersShort-Term Fixed IncomePayden & RygelIntermediate-Term Fixed IncomeGarcia Hamilton & AssociatesLong-Term Fixed IncomeBlackRockMortgage-Backed Fixed IncomeDoubleLine CapitalMunicipal Fixed IncomeMacKay ShieldsAll-Country World Index Ex-U.S. EquityAcadian Asset MgmtEAFE EquityArtisan PartnersEmerging-Markets EquityBaillie GiffordFrontier-Markets EquityAshmore GroupGlobal Balanced/Tactical Asset AllocationJohn Hancock InvestmentsGlobal Core EquityState Street Global AdvisorsGlobal Growth EquityMarsico Capital MgmtGlobal Value EquityBurgundy Asset MgmtEmerging-Markets Fixed IncomePrudential Fixed IncomeGlobal Fixed IncomeStone Harbor Investment PartnersGlobal Unconstrained Fixed IncomeBlackRockFunds of Hedge FundsBlackstone Alternative Asset MgmtHedge FundsElliott Mgmt Corp.InfrastructureGlobal Real Assets (J.P. Morgan Asset Mgmt)Liability-Driven InvestmentsGoldman Sachs Asset MgmtPrivate EquityKKR & Co.Real Estate Investment TrustsHeitmanVenture CapitalKleiner Perkins Caufield & ByersMoney Manager of the YearSpiros Segalas, Jennison AssociatesInstitutional Investor’s editorial team separately chose institutional investors at corporate and public pensions, endowments, foundations and health systems who represent the ideals of innovation, integrity and professionalism. Their profiles are below.
In addition to running institutional portfolios, the 82-year-old Segalas has overseen the Harbor Capital Appreciation Fund since 1990. He also co-manages several funds, including the Prudential Jennison Growth Fund and the Prudential Jennison 20/20 Focus Fund. Segalas looks to identify companies with defensible franchises that allow them to grow well above average. He is sensitive to valuation and thinks the current environment bodes well for most growth-stock investors. “We’re in a slow-growing world economy, and that means fewer companies will show good growth,” he says. “The problem with that is we won’t be the only ones who identify that trend.”
Some portfolio managers try to forecast further into the future in an effort to block out headline noise. Susan Bao, one of three portfolio managers on J.P. Morgan Asset Management’s large-cap core strategy, says her team spends more time than its competitors focusing on the long-term outlook for companies. J.P. Morgan is the Large-Cap Core Equity manager of the year.
To illustrate her point, Bao tells a story of playing with a flashlight while recently camping with her two young sons. “When you shine a flashlight on your feet, it’s clear right around you, but the rest of the area is still dark,” she says. “But aim it a little forward, and you can see into the woods.” For its flashlight the J.P. Morgan team — which includes 27 fundamental research analysts and former Money Manager of the Year Thomas Luddy — uses an eight-year data model for the 600 stocks in its investable universe. “That protects us from focusing on the short-term numbers,” Bao says. For now, Bao and team are staying away from high-dividend-paying stocks, which they believe have gotten too expensive as investors have holed up in them, and are tilting toward cheaper cyclical stocks.
Some noises shouldn’t be tuned out, says N. David Samra, portfolio manager of global value strategies for Artisan Partners, referring to the extreme measures central banks are taking in the developed world. Samra, whose firm is manager of the year in both EAFE Equity and Midcap Growth Equity, says his four core tenets of value investing haven’t changed since he started the strategy in 2002 but that monetary policy moves continue to distort everything from capital allocations to government and corporate spending and consumer behavior. “What will be the implications when central banks start normalizing?” he asks. “How will that affect real spending patterns and the equities I own?” As an example, he believes housing is much more affordable at low rates and is thinking about how many houses are being sold at negative real interest rates that wouldn’t be sold otherwise.
Samra also is buying banks. On the one side, regulators have made changes that dramatically improved the institutions’ safety and the clarity of their balance sheets. On the other side, he says, low interest rates have eaten into bank profits and a dark cloud of negative sentiment still hangs over them. “I follow the negatives into areas that have been beat up,” he says. “That’s what value investors do.” •
Follow Julie Segal on Twitter at @julie_segal.
The 2016 U.S. Money MastersClick below to view profiles.
Ford Motor Co.Foundation
|manager lifetime achievement|
|Small Corporate Pension|