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.