Sad as I was that my trip to Pittsburgh was canceled, at least I got to be in Philadelphia for the Friday before the big game between the Eagles and the Vikings. Spirits were high and a Super Bowl was within the city’s grasp.
My first meeting of the day was out in the suburbs of Conshohocken with Bill Luterman and James McGrath at Forbes Family Trust (FFT) and LGL Partners – a $4.5 billion combined multi-family office and investment firm.
FFT and LGL Partners, based in New York and Philadelphia, started their partnership back in 2013. FFT was founded in 2009 to provide wealth and investment management solutions to ultra-high-net-worth and institutional clients in the aftermath of the financial crisis, while LGL Partners arose from a single-family office started by Brook J. Lenfest after the cable television company founded by his father, H.F. ‘Gerry’ Lenfest, was bought up by Comcast in 2000.
Luterman is the firm’s president and chief investment officer, while McGrath is a partner and the director of research. Together, they lead the manager research team of eight.
The team has extensive alternative and traditional investment expertise, with generalists covering most asset classes. It uses 46 non-traditional core managers and between 12 and 15 traditional managers to serve its 55 clients, many of whom are accomplished investors in their own right.
The team has model portfolios that act as yardsticks for comparison, but each client has a customized solution that reflects a variety of unique circumstances and considerations.
‘Where markets are today, after a significant and prolonged bull market, we are looking for eclectic, non-beta-driven strategies,’ Luterman said.
Evaluating ideas from a variety of sources, including the firm’s clients and a broad network, the team is particularly attuned to niche, esoteric investments.
The duo said it has been looking at a variety of opportunities across the value chain for cryptocurrencies and blockchain technologies; lithium, cobalt and other upstream components of the electric vehicle revolution; and new types of computing using AI and quantum logic.
They have made particular progress in areas as diverse as insurance-linked securities, novel private real estate strategies and structured portfolios of longevity-related assets, they said.
My next meeting, still in the suburbs, was with R.J. Smolenski (pictured below) at Pitcairn, a multi-family office with $5.7 billion in assets under advice.
Pitcairn was a single-family office for 60 years until 1987, when it became a multi-family office. In the 2008, the firm became an open architecture platform and now conducts due diligence on third-party managers. The research team works with between 50 and 60 active strategies for its client portfolios and uses ETFs for the younger generations’ portfolios. Smolenski heads up investment research alongside Michael Pidhirskyj, who focuses on fixed income. Pidhirskyj joined the firm a year ago from SEI, where he worked for our former cover star Stephen Beinhacker.
Smolenski has recently been evaluating ESG funds and has invested in five new managers in this space. For the start of the year, Smolenski is keeping a close eye on the tax reform and how the managers they partner with are responding to it.
Before heading back to the Big Apple, I met with Jared Leonard (pictured below) at the PFM Group, a $20 billion consultant. Leonard is an investment research analyst at the firm, conducting due diligence for all non-US equity strategies. He was also previously at SEI, covering international, emerging market and global equity strategies. Alongside Leonard, there are four other analysts on the manager research team, who split their time between domestic equity, fixed income and alternatives due diligence.
The PFM Group’s multi-asset class division offers both traditional consulting and outsourced chief investment officer services. Its clientele is heavily affiliated to the public space, including government plans, union plans, endowments and foundations. The bulk of its assets under advisement are held through traditional equity and fixed income managers, which are the focus of the firm’s ongoing investment research.
Leonard and his research colleagues have built a database of all of the rated managers used in the PFM Group’s client portfolios. The team tracks roughly 40 managers in international equity, 110 in domestic equity and a further 60 in fixed income. Most client portfolios feature a blend of active and passive equity exposures.
Most recently, the PFM Group launched subadvised mutual funds for domestic equity, international equity and fixed income. Leonard and team were tasked with sourcing the subadvisors utilized by these multi-manager funds.