How to Pick Winning Managers
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To find undiscovered investment strategies, financial advisors must perform due diligence that goes beyond track records.
Finding undiscovered investment strategies – whether in a mutual fund, ETF or SMA – before they become widely known for generating alpha is the holy grail for investment advisors. When you succeed, you secure the benefits of a good investment for your client, and you look smart. More importantly, you appear prescient – everybody wins.
There are many elements that go into choosing a best-in-breed asset manager and I will state my bias: Boutique asset managers, by their very nature and structure, can provide a competitive investment edge. Allocating client assets to a boutique manager incurs risk and requires due diligence beyond a review of track records and fees.
The strengths of boutique asset managers begin with their origin story. It usually involves a talented group of investors who grew frustrated by the constraints and competing interests at their former large firms and left to start their own enterprises to gain the freedom and flexibility to invest according to their convictions.