My first meeting of the day was with Jack Peluso at Allegheny Financial Group, a $4.5 billion RIA and broker-dealer.
Allegheny was founded in 1976 by James Hohman and James Browne to provide comprehensive financial planning for clients in the greater Pittsburgh area. In 1977, Hohman and Browne added Allegheny Investments to provide brokerage services for their clients. Today, it’s one of the oldest and largest independent broker-dealers based in Pittsburgh.
Peluso (above) is part of the mutual fund research team of three, reporting to CIO Jack Kraus. Along with analysts Jim Rambo and Joe Clark, Peluso is responsible for putting together a list of recommended mutual funds – all actively managed, open-ended strategies. Right now, the research team serves around 50 advisors under the Allegheny umbrella. Although the advisors have the flexibility to go beyond the research team’s recommendations, the vast majority of Allegheny’s assets are concentrated within the 146 funds that are currently on the list.
Each team member is responsible for roughly 50 recommended funds at any given time, in addition to other strategies under consideration within their respective asset classes. On the alternative investments side, Nick Lewandowski manages the six fund-of-hedge funds offered by Allegheny, which currently account for around $200 million in combined assets.
Allegheny has a clear philosophy, and does not believe in investing in a ‘tactical’ way, Peluso said. ‘We are not market-timers. We view ourselves as long-term investors who believe strongly in diversification, active rebalancing and mean reversion,’ he said.
The research team is currently focused on a few projects outside of its usual manager due diligence.
‘Over the past three years, we have taken huge steps to increase our productivity as a team by simply utilizing more and better technology within the department. It’s a project that Clark and I are heavily involved in on an ongoing basis,’ Peluso said. ‘We are also constantly trying to assess our advisors’ satisfaction with the materials and support they receive in order to find areas where we can improve as a team.’
My next meeting of the day was with another RIA, Xpyria Investment Advisors. I met with Bret Stutzman, director of research and head of the investment committee at the $700 million firm.
Xpyria was established in 1990 and functions as both an outsourced chief investment officer for institutional clients and a wealth manager for individuals. The firm builds equity and fixed income models and applies those to each client based upon risk level. Stutzman (above) chooses the external managers that are implemented in client portfolios and also sets the firm’s opportunistic asset allocation and diversification strategies.
‘Manager research has always been at our firm’s core,’ Stutzman said. ‘Our process is completely independent and objective, with a singular goal of finding superior managers. We have a preference for bottom-up stock and bond pickers that are independent thinkers and that display passion for their craft. This often leads us to more boutique-like managers.’
Stutzman and his research analyst Brad Prosper conduct approximately 150 manager meetings per year. They research both established and emerging managers and do not require a three-year track record for consideration. The firm currently works with 25 managers.
Stutzman said he was particularly interested in the concept of interval funds and their ability to give access to private markets. ‘It is a structure that is rapidly evolving and that we will continue to follow closely,’ he said.
Next I caught up with Joe Palmieri (below) at Waldron Private Wealth, a $1.7 billion RIA and multi-family office.
Palmieri is on a team of seven that conducts the investment research for the bespoke, custom portfolios of the firm’s 160 clients. The team works off a high conviction list of funds and managers to build the clients’ portfolios. Along with conducting due diligence, the team is also working on its next-generation planning and is thinking about the demands that will likely come from its younger clientele.
My last meeting of the day was with Larry Wasserman at PNC Investments (below). Wasserman is a senior product manager and head of due diligence at the $50 billion broker-dealer.
There are 13 members on the team, performing enhanced product due diligence for the firm’s advisory and brokerage platforms. There are approximately 1,500 mutual funds and 700 ETFs on the platform, while the team’s high conviction list has around 280 funds and 180 ETFs.
There is some overlap in funds on both Wasserman’s list and that of former Citywire cover star Scott Lavelle, the director of investment advisor research at PNC. However, the differences between the two also reflect the different demands and needs of the brokerage business.
Currently, Wasserman and his team are focusing on adding ESG strategies – a move that Lavelle and his team have also been working on. Wasserman is in the process of launching a robo advisor for the broker-dealer too.
Before heading off to the airport, I managed to get a quick photo in front of the Pittsburgh Steelers’ Heinz Field (below).