Wells Fargo Investment Institute is planning to hire 10 analysts for its global manager research team in an effort to meet increased demand for its services from advisors and wealth managers within the wirehouse.
The team currently has 32 members of which 22 are investment analysts. It is planning to increase the number of analysts by a further 10, according to head of global manager research Greg Maddox.
Of the 10 positions available, three are senior analyst roles, three intermediate and four entry level, all covering domestic fixed income and equities.
Maddox said the positions were available across the team’s offices in San Francisco, New York, Charlotte, St Louis, Denver, Raleigh, London and Hong Kong.
The Investment Institute houses the manager research team as well as a global investment strategy unit, global alternative investments division and global portfolio management team.
The manager research team is structured by asset class rather than investment vehicle so analysts evaluate strategies in a variety of formats, such as mutual funds, exchange-traded funds, separately managed accounts, unified managed accounts, closed-end funds and hedge funds.
The group puts together a list of strategies in which it has high conviction. This is then used by broker-dealer Wells Financial Advisors, Wells Fargo Private Bank, family office Abbott Downing and pension service Institutional Retirement Trust.
There are around 15,000 advisors in the broker-dealer business.
Maddox did not give a figure for the number of strategies the team currently covered but said on average analysts covering long-only offerings oversaw around 40 each. He said this number would be lower depending on the complexity of strategies covered and could be as low as 15 for more complicated strategies such as hedge funds.
The new recruits will mean that in the long term the Investment Institute will expand the number of managers it covers.
Maddox said the reason for boosting the number of analysts was partly to help the four Wells businesses comply with the fiduciary rule, which is currently under review but still scheduled to come into force on June 9.
He said the other reason was that the group had seen an uptick in demand for centralized investment research.
The move to ultimately cover more strategies has been seen at other wirehouses too. While many, such as Morgan Stanley and Merrill Lynch, are cutting the total number of funds on their platform, the actual number of strategies being researched and recommended by home office teams is on the rise, Maddox said.
‘With that narrowing, conviction and research support is actually going up,’ he said.
Digging the data
Maddox did not specify whether his group was on the lookout for managers in particular asset classes, but outlined the kind he and his team were searching for.
‘Essentially we are looking for managers who are using different data sets and we are looking for other sets of managers who are enhancing returns through more of an active participation of their ownership,’ he said.
‘We are looking through asset classes for these characteristics,’ he said. ‘If you can find a manager who is doing more than one of these at any given time you have a real opportunity to add value long term.’
Maddox said the group was also looking to add ‘second generation’ smart beta strategies.
‘We are looking at smart beta a little bit more closely,’ he said. ‘We consider it to be active management.’
He said his team currently covered some factor-based strategies but was exploring more esoteric tilts and index weightings. As part of this work it had added a minimum volatility strategy but was also looking at less mainstream tilts such as weightings on sales quality and earnings growth.
Maddox was also bullish in his outlook for active managers who he tipped to benefit from the end of quantitative easing, rising rates, and some of the new administration’s policies.
‘We do think the environment for active management is changing,’ he said. ‘There will be forecastable winners and loser across asset classes, which is going to be favourable for active management.’