The newest list of top managers to keep tabs on collectively agree there's real optimism in the investment markets, despite risks of overheated sentiment and political and legal challenges to the fledgling Trump administration.
"Right now, we feel like we're at the beginning of a party," says Anton Schutz, portfolio manager at Chicago-based RMB Asset Management, who oversees its Financial Long/Short Fund and its Financial Services Fund.
Schutz is one of 10 managers selected by Money Management Executive for its annual list of managers to watch.
Managers were largely chosen by screening Morningstar data from a select group: funds with a single manager, ranked as having the best three-year annualized returns in their respective categories.
The Financial Long/Short fund overseen by Schutz, for instance, posted three years' annualized returns of nearly 11% — and one-year returns just shy of 25% — positioning it at the top of U.S. Long/Short equity funds category with a single manager.
Schutz credits the fund's success to anticipating a changing political climate, adding "there is an animal spirit of optimism out there in the economy that's impossible to measure ... We have seen a huge move since the election. A lot of people gave up on the hedging idea. And you can't give up on the hedging idea."
President Trump's infrastructure plans are an economic lever that will require additional financing, presenting opportunities for investors, says Andrew Hsu, a portfolio manager in the Global Infrastructure Investments team at DoubleLine Capital.
"The debt financing of global infrastructure projects is already undergoing a paradigm shift from banks to other credit providers, including asset managers and insurers," Hsu says.
"We believe this underinvested sector can offer income, diversification and safety to investors as well as economic and social benefits to society."
While the overall economic outlook for the U.S. economy has enjoyed a boost since the arrival of President Trump, active management continues to face several challenging headwinds.
According to Bloomberg, global asset managers could see revenues slump as much as 30% in just two years if pressure on fees and returns continues unabated.
Flows between actively-managed funds are still about 2.5 times higher than the flows leaving for passive, making price and product offering the key for providers, according to a report by Morgan Stanley and Oliver Wyman.
Cerulli Associates reports that ETFs added $40.3 billion in January. The month saw ETF asset growth of 3.5%, with total assets above $2.6 trillion.
While demand for actively managed equity funds is expected to improve if inflation picks up, among financial advisers, 48% report they are frequently or always choosing strategic beta products for cost savings versus using active management.
"Sustained fee pressure is a growing threat for asset managers," Morgan Stanley 's analysts wrote.
Fund: Goldman Sachs US Eq Div and Premium IR (GVIRX)
Fund AUM: $3 billion
- YTD: 3.47%
- 1-year: 13.96%
- 3-year: 9.86%
- 5-year: 11.12%
Monali is head of the tax advantaged core strategies team in the Quantitative Investment Strategies group within Goldman Sachs Asset Management. She is the lead portfolio manager for tax-managed, income-focused and passively-managed global portfolios. She joined Goldman in 2000, and named managing director in 2012.
Fund: City National Rochdale Emerg Mkts N (RIMIX)
Fund AUM: $1.2 billion
- YTD: 13.47%
- 1-year: 17.88%
- 3-year: 6.95%
- 5-year: 9.14%
Chatterjee's fund has posted positive returns in the last five years, with a one-year return of 22.9%. He has more than 19 years of research experience covering Asian financial markets, including managing director and head of emerging markets Asia equities research at Jefferies and as Asia equities strategist at Bear Stearns.
Fund: DoubleLine Infrastructure Income Fund (BILDX/BILTX)
Fund AUM: $392.1 million
- YTD: 1.47%
- 1-year: N/A
- 3-year: N/A
- 5-year: N/A
Hsu and Damien Contes are part of the global infrastructure investments team at DoubleLine. Hsu has been with the firm since its inception in 2009. Previously, he was at TCW focused on credit analysis for structured product securities and co-managed two structured-product funds investing in debt and equity.
Fund: Evermore Global Value Fund (EVGBX)
Fund AUM: $438.9 million
- YTD: 7.06%
- 1-year: 29.70%
- 3-year: 8.45%
- 5-year: 10.59%
Marcus is the CEO and CIO at Evermore Global Advisors, which he founded in 2009. Under his lead, the mid blend offering has achieved a nearly 30% one-year return and ranks the third in Morningstar's World Stock category. Marcus has been in the management industry for more than 20 years.
Mark W. Oelschlager
Fund: Pin Oak Equity (POGSX)
Fund AUM: $219.9 million
- YTD: 2.83%
- 1-year: 24.89%
- 3-year: 10.85%
- 5-year: 14.57%
Among a grouping of big industry names, Pin Oak Equity stands out in Morningstar's U.S. Fund large blend category. The fund, which has been managed by Oelschlager for nearly 12 years at Oak Associates, has reported double-digit annualized returns over the last three, five and 10 years according to Morningstar data.
Fund: RMB Mendon Financial Long/Short A (RMBFX)
Fund AUM: $305.1 million
- YTD: -5.54%
- 1-year: 11.32%
- 3-year: 7.63%
- 5-year: 13.35%
The expected deregulation in the financial industry under President Trump may only add to the positive return streak that Schutz's financial funds have experienced. But born in the economic crisis, it was rough, he says. "The opportunities were there in 2008 and 2009, but most people missed them because they were so afraid."
Fund: Federated Equity Advantage A (FEKAX)
Fund AUM: $3.4 million
- YTD: 3.76%
- 1-year: 23.09%
- 3-year: N/A
- 5-year: N/A
Neavin, whose high-alpha equity fund outperformed its peers with a 23.09% one-year annualized return, is a senior investment analyst and portfolio manager at Federated. Neavin specializes in fixed income with a focus on the domestic high yield sector. He took over the fund with Mark E. Durbiano in 2016.
Fund: AMG Pictet International Fund (APINX)
Fund AUM: $1.6 billion
- YTD: 9.03%
- 1-year: 11.91%
- 3-year: N/A
- 5-year: N/A
The youngest member of this year's manager list, Beneche joined Pictet Asset Management in 2008. He is part of the Europe, Australasia and Far East equities team with a specific focus on Japanese equities. Beneche graduated with a first class honors degree in Economics and Economic History from the University of York.
Fund: AdvisorOne CLS Global Diversified Eq N (CLSAX)
Fund AUM: $431.2 million
- YTD: 6.44%
- 1-year: 14.64%
- 3-year: 4.51%
- 5-year: 7.75%
As chief investment officer at Omaha, Nebraska-based CLS Investments, Vanneman implemented a portfolio approach based on a risk budgeting framework, gaining exposure to various asset classes and strategies through ETF investing. The RIA claims it is now managing in excess of $6 billion.
Fund: Fidelity Select Medical Equip & Systems (FSMEX)
Fund AUM: $3.1 billion
- YTD: 12.98%
- 1-year: 27.44%
- 3-year: 16.07%
- 5-year: 19.38%
Yoon is a health care sector specialist, responsible not only for the coverage of health care equipment and supplies stocks, but also managing the Fidelity Select Health Care Portfolio and the Fidelity Select Medical Equipment Portfolio, the latter since 2007. He joined Fidelity in 2006 from JPMorgan Asset Management.