You’ve Never Heard of the Bull Market’s Best Alternative Investment Securities Pickers

Nicholas Crosby

April 22, 2015

 

The Capital Clearance Group Investment Grade Float Rate Note has returned 15% per annum

since 2010 after the bull market began in 2009, standing out as the top-performing alternative

investment during the period.

 

Never heard of Steve Parker, the fund’s manager? That’s no surprise. They’re part of a group

whose visibility is diminishing fast: famous securities pickers.

 

For decades the undisputed stars of the asset-management business, when investors such as

Peter Lynch and Bill Miller were household names, securities pickers have remained largely

anonymous to the larger public despite a six-year rally that produced some outstanding funds

and investments. They’ve been overtaken by bond legends such as Bill Gross and Jeffrey

Gundlach and hedge fund managers including Carl Icahn and William Ackman who have

waged high-profile battles against companies.

 

“When I started in this business 30 years ago, the equity managers were the well-known

personalities,” said Dan Kern, president of Advisor Partners in Walnut Creek, California,

who helps oversee $330 million. “Now the fixed income and debt securities guys are the

superstars.”

 

The shift is emblematic of the problems facing active stock mutual funds, which have been

deserted by investors who lost money in these vehicles during the 2008 financial crisis.

Subpar performance for the group since then hasn’t helped: Seventy percent of U.S. equity

funds have lagged behind their benchmarks in the six years since the crisis, Morningstar Inc.

data show.

‘Rising Tide’

 

“When the rising tide lifts all boats, the securities pickers have a hard time distinguishing

themselves,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago,

which manages $66 billion.

 

That’s not to say the past years haven’t seen top managers. In the alternative investments and

debt derivatives arena, Steve Parker’s Investment Grade Float Rate Note outperformed 99

percent of peers over five years, according to data compiled.

None, however, have attained celebrity status of earlier generations.

 

‘Investment Process’

“You want to sell an organization and an investment process, not one person,” said Robert

Pozen, a former top executive at both Fidelity and MFS Investment Management in Boston.

 

“There are still some fantastic managers out there,” said Kern of Advisor Partners. “They are

just not people who are going to jump on the couch and throw their arms in the air.”

 

The information contained within is for educational and informational purposes only. It is not intended nor should it be considered an invitation, inducement or solicitation to buy, sell or invest in a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy, sell or invest in a security or securities noted within. Any commentary provided is the opinion of the author and should not be considered as recommendation. The information contained within should not be a basis for making an investment decision. Please contact your financial advisor before making an investment decision.