Investors often mistake beta for manager alpha, and credit managers for returns that are driven more by macroeconomic conditions or market sentiment than by a manager’s skill.
From sector or capitalization influences to the inherent biases of a given investment process, external factors can have a significant impact on a manager’s performance. Since those factors are subject to change, it’s important to identify managers whose performance is due more to skill than good fortune.
Identifying and selecting skilled manager talent is a central competency at Verus. Our approach to manager research begins with a thorough understanding of the capital market environment and the many factors that contribute to investment returns.
Our research professionals follow a thorough and consistent process that includes conference calls, in-person meetings at our offices and on-site visits with managers.
A foundation of quantitative research captures all the relevant varieties of statistical information. We apply a proprietary macroeconomic overlay to historical results, with the goal of better understanding the not-so-obvious biases of a manager’s philosophy and process.
Our qualitative framework focuses on the many intangibles that we believe contribute to success within investment teams, including the passion of key personnel, the commitment of the organization and staff, organizational structure, culture, motivational factors and alignment of interests with the client.
The result is the identification of the right manager and investment strategies to meet the specific needs of our client.
Learn more about our views on active management here.