These five equity portfolio managers demonstrated exceptional skill in a challenging year.
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Essentia’s Behavioral Alpha® Award recognizes active equity portfolio managers who have demonstrated superior investment decision-making skills over a 36-month period. Using our proprietary Behavioral Alpha Benchmark methodology, our ranking considers the value added or destroyed by individual investment decisions, rather than traditional performance-based metrics derived from historical returns (and thus subject to the random effects of luck).
The most recent assessment concluded on December 31, 2022 (read our press release) and measured the demonstrated skill of 90 portfolio managers in seven key decision types: stock picking, entry timing, sizing, scaling in, size adjusting, scaling out, and exit timing. We isolated each decision type and measured its impact on the portfolio using decision attribution analysis techniques we have developed in conjunction with our clients for nearly a decade.
Managers were scored on an Essentia Behavioral Alpha Frontier (EBAF) that considers the hit rate (percentage of decisions that added value) and payoff (net amount of value added) for each decision type. The five managers with the highest aggregate scores across all decision types are recognized as Behavioral Alpha Award winners:
The five highest-scoring managers, represented by the magenta dots, are those towards the upper-right on this frontier diagram — furthest away from 0,0.
| Rank | Manager(s) | Portfolio |
| 1 | Inigo Mijangos Joseph Idaszak |
Brookfield – Global Renewables & Sustainable Infrastructure |
| 2 | Jonathan Good | Baird – Small/Mid Cap Growth |
| 3 | Waldemar Mozes Jonathan Brodsky |
Harbor Capital Advisors/Cedar Street AM – International Small Cap Fund |
| 4 | Vishal Gupta | Morgan Stanley IM – Emerging Markets Leaders |
| 5 | Xavier Hovasse Haiyan Li-Labbé |
Carmignac – Emergents |
Assessment Highlights:
- Three managers — Jonathan Good at Baird, Vishal Gupta at Morgan Stanley Investment Management, and Xavier Hovasse/Haiyan Li-Labbé at Carmignac — have remained in the top five since our initial ranking.
- Two managers — including the number-one ranked team of Inigo Mijangos and Joseph Idaszak at Brookfield — are appearing in the top five for the first time. The other new top-five finisher is Waldemar Mozes and Jonathan Brodsky at Cedar Street Asset Management sub-advisor to the Harbor International Small Cap Fund, coming in at number three.
- Mijangos and Idaszak at Brookfield showed solid decision-making skills across the board, but particular strength in stock picking (where they were number one) and size adjusting (where they were number 4).
- More managers got more decisions right. Across all decision types, about 23% of the managers in the assessment study had a hit rate above 50% — compared to 18% in the last ranking.
- At the same time, there was a decline in portfolios with positive payoff, from 68% to 63%.
- Overall, the percentage of portfolio managers whose decisions added value increased from 43% in the last ranking to almost 47% in the year-end assessment — a significant improvement.
- Our Behavioral Alpha Benchmark is increasingly being adopted by allocators of capital to help them assess and select portfolio managers. In fact, our third-place winning portfolio, Harbor International Small-Cap Fund, is a part of the Harbor Capital multi-manager platform and is managed by Waldemar Mozes and Jonathan Brodsky at Cedar Street Asset Management.
To contact Essentia about participating in the Behavioral Alpha Benchmark/Award or using the methodology for manager assessment, please complete the form below.
