How does a CIO find a winning fund manager? On top of needing to make the right calls in asset allocation, risk budgeting and team management, institutional investors are expected to identify fund managers with the best chance of outperforming in the future. eVestment data shows they perhaps struggled to meet this challenge in 2018.
Our research into the Best-Performing Strategies for Global Investors leverages unique data from the eVestment platform to reveal the asset managers who delivered the best returns in the most favored investment universes, but also those who were potentially overlooked by investors. We ranked universes by net asset flows, AUM, views and screening activity to produce a proprietary list of the most favored universes by region and the top managers within them.
Developed markets investors sought emerging markets exposures
U.S., European and Canadian investors showed strong interest in EM strategies last year. The Global Emerging Mkts All Cap Core Equity universe ranked as the most popular within the U.S., while three of the top five universes for European investors were emerging market-focused.
Despite this popularity, institutional investors appear to have missed out on better performing emerging market equity managers. Just three of the ten best-performing Global Emerging Mkts All Cap Core Equity strategies had above universe median profile views, and only half of the Global EM All Cap Growth Equity top performing strategies captured above median level of interest.
Global diversification attractive
Investors in all regions showed an interest in global diversification. The top five universes for European investors focused on global strategies, while four of the top five universes for investors in Canada, ME/A and APAC, and three of the top five for U.S. investors invested globally. Canadian investors also focused more interest toward Global All Cap Core Equity strategies than any other region did toward any single universe.
The Global All Cap Growth Equity universe was perhaps the most popular internationally, featuring in the top five for APAC, European and Africa-Middle East investors. Again, investors appeared to miss out on winning managers within this universe. The top three strategies saw net outflows and below median product views, despite meaningfully outperforming their peers.
U.S. investors focused locally for fixed income
Unlike their European counterparts who were primarily focused outside of their home region, U.S.-based investors and consultants were most focused on fixed income within the U.S. This was surprising given the international diversification picture, and also because eVestment data from Market Lens shows U.S. plans are intending to rebalance to global fixed income strategies in 2019.
Again, we noted that seven of the ten best performers saw net outflows despite stellar performance. Two strategies in the U.S. Core Fixed Income top ten attracted just two product views over a 12 month period despite strong excess returns and information ratios of 1.38 and 0.78 respectively.
Harnessing data to make better investment decisions
This research is based on manager-reported data in the eVestment database, and investor/consultant activity within the eVestment platform. Over 4,000 institutional asset management firms submit more than 2,000 data points for more than 25,000 investment strategies to eVestment every quarter, including performance, holdings, characteristics, narratives, fees and AUM.
These rankings can help CIOs, portfolio managers, and investment advisors think critically about their portfolios and preferred managers. Are there top managers you may not be aware of? Are you able to efficiently research and compare statistics and profiles on individual strategies and their firms?
Asset managers can also use this data to think about their distribution strategy. Are your top strategies visible to investors relying investment databases? Are you able to gauge and monitor trends in investor interest and size markets? Are you able to understand your unique strengths and what makes you different from your competitors?
At eVestment, it is our mission to help investors find the right partner for investing success. We hope this research helps you consider your portfolio in new ways and meet the challenge of finding winning fund managers.