Investment managers must be rated sufficiently high across all six key attributes, through a thorough due diligence review, to be included on FEG’s “recommended” list for clients.
Conviction
Investment management firms with conviction are not closet indexers. They do not let the fear of tracking error drive their investment process. Instead, they strategically invest in securities they believe will ultimately be rewarded by the market.
Consistency
Investment managers who are consistent in their investment philosophy do not fear underperformance, understanding it is a natural part of adhering to an investment discipline. When underperforming the market or their peers, they remain committed to their investment strategy.
Pragmatism
Pragmatic investment managers focus on market areas where they have a competitive edge, delivering a unique advantage to investors.
Investment Culture
Leading investment managers have a tangible investment culture, in which the passion for their style of investing is obvious, and where they place investment decisions ahead of business decisions.
Top-tier firms consistently attract and retain talented investment professionals who embrace the firm’s philosophy, aligning their compensation with clients’ interests.
Risk Control
Outstanding investment managers are not blind risk-takers and do not allow their investment conviction to distort good judgment.
Leading firms implement risk controls that limit the negative impact of any one decision on the portfolio.
Active Return
Effective investment firms demonstrate positive long-term risk-adjusted returns, even if they do not outperform the benchmark in every market period.
In addition to these six attributes, investment managers are evaluated for their organizational structure, personnel, investment philosophy, and portfolio performance.
FEG research analysts employ both on-site visits and in-office interviews to become comfortable with each manager's rating on these six tenets.