Our two-day retreat took place at the newly renovated Ritz Carlton, which overlooks the Windy City’s stunning skyline and Lake Michigan.
Among the delegates were heads of manager research and due diligence from consultants, wirehouses, registered investment advisors (RIAs), family offices, broker-dealers, bank trusts and subadvisor selection teams at asset management and insurance firms.
Over the two days, the analysts met with 10 of a possible 14 portfolio managers across a range of asset classes, heard from keynote speakers and had the opportunity to catch up with their peers – and me!
Starting off at the welcome dinner on Wednesday evening, I caught up with Erik Furnish, head of manager research at Hilliard Lyons, and Rick Lake, co-founder and portfolio manager at Lake Partners.
Furnish told me that portfolio surveillance is at the top of his team’s list right now. ‘We’re constantly trying to mitigate risk, and I have some periphery duties looking at reps with discretion. There’s a lot of surveillance and concerns with their portfolios. We’re afraid they don’t have the processes that a lot of our third-party managers have.’
Meanwhile, Lake is focused on his firm’s multi-strategy and multi-manager programs at the $2 billion RIA. ‘Our number one research area is for our LASSO alternative ETF portfolio, which is made up of ETFs that use long/short strategies across asset classes to provide tools for risk management and additional sources of return.’
The next day, the analysts had an action-packed morning of roundtable discussions with portfolio managers and an opening presentation from Austan Goolsbee, an American economist and the former economic advisor to Barack Obama. Goolsbee brightened everyone’s day with his positivity for the US economy going forward.
Before the analysts jumped back into their manager meetings, I caught up with former cover stars and friends of the magazine Bill Harding and Laura Lutton. Harding (above) is chief investment officer at Jackson National Asset Management. He leads a team which is responsible for selecting and monitoring subadvisors across the firm’s platform of funds. Lutton is director of manager research practice for North America at Morningstar. She oversees the team which assigns the firm’s Analyst Ratings to mutual funds available for sale in the US.
Harding has an ambitious to-do list: ‘We are always focused on expanding our platform of sub account options and trying to improve upon that, so we are doing some work on multi-factor smart beta solutions, some multi-asset portfolios and making sure we have a robust line-up of managers within the small-cap space.’
After lunch, we heard from Susan Carnicero, a former security specialist with the CIA, who shared tips on how to detect deception. At least the analysts were thoroughly prepared for their next manager meetings!
The final day of the retreat kicked off with a thought-provoking talk on the impact of the digital revolution from Carl Miller, research director of the Center for the Analysis of Social Media at Demos. Leaving the presentation a bit terrified at how democracy is being warped by the online world, I decided to sit down and discuss with analysts what is keeping them awake at night when it comes to investments.
Harding said he’s concerned with the trade war rhetoric coming out of Washington and its impact on some emerging markets. ‘It’s an area where we are overweight in some of our portfolios on both the equity and debt sides, so it has been a little bit of a hindrance to performance over the short term. We still believe long term in our positioning there though.’
Lake is concerned too, particularly about the potential for risk cascade. ‘Imagine if there was a combination of a policy error by a central bank, trade war frictions, a geopolitical outburst, a whiff of inflation and the mechanics of computer selling or ETF holders mass liquidating certain asset classes. That could lead to a risk cascade.’
On the other hand, Furnish is worried about US valuations. ‘I’m concerned that we have too much exposure to domestic equity for our clients. We need to let wealth advisors know that while valuations are tempting internationally and in emerging markets, they can’t put all their eggs in one basket,’ he said.
Lutton (above) takes her job of finding good investments seriously. ‘It’s a constant struggle of trying to weed out strategies that look a lot like what else is out there in the marketplace and finding things that are really unique,’ she said. ‘We want to make the right calls and identify strong investments for folks. It’s when things aren’t going well in that regard that I’m up at night.’
Finally, check out the photos of our former cover stars, the most recent being Gene Goldman of Cetera (below), and our new Instagram photo frame. See you all at our next event in LA on October 17 and 18!