• US Wealth Manager
  • 2021
  • Public Equity
  • USD50m–USD75m
  • Global Emerging Markets
  • N/A
  • Segregated account
  • Equity portfolio analysis, Manager research

Our specialist says:

With equity exposure forming the core of most asset owners’ portfolios, our equity searches often require careful consideration of how a new manager will fit within an existing portfolio. We view this topic through several lenses: we look at the possible overlap between existing holdings and their performance patterns as well as similarities between managers’ investment styles and philosophies. At every stage of a client engagement, we seek to ensure that any new additions to a client’s portfolio will serve a clear purpose.
  • 230Considered
  • 60Long List
  • 10Second Stage
  • 3Shortlisted
  • 1Selected

Client specific concerns

From the outset, the client’s discussions with bfinance were informed by several key questions:

  • Would the firm need to find a like-for-like replacement for its international manager once it redeemed assets, or were the other equity managers in its portfolio providing sufficient exposure to small and mid-cap companies?
  • Did the firm’s existing equity portfolio have any ‘gaps’ in that could be addressed by making a new allocation?
  • Were two (or more) of its existing managers providing similar exposure in terms of investment style, portfolio holdings or performance profile?
  • Could any of its current equity mandates be consolidated?

  • The initial review identified that the client’s overall equity portfolio had a clear ‘Quality Value’ style profile. The analysis also showed that, relative to the client’s benchmark—the MSCI All-Country World Index (ex-US)—the client’s portfolio had a significant overweight to small and mid-cap international companies, both before and after terminating the mandate in question. The bfinance team subsequently devised a range of viable scenarios for adjusting the client’s portfolio and modelled their impact. As a consequence, the client opted to replace the international small- and mid-cap mandate with a new, dedicated allocation to Global Emerging Markets (GEM) equities. Given the style orientation of the client’s portfolio, the proposed GEM mandate was designed to have a specific focus on managers with a ‘core’ or—preferably—‘growth’ style to complement the client’s existing managers and deliver an excess return of at least 2% per annum versus the MSCI Emerging Markets Index.


  • Providing an independent viewpoint: bfinance began the assignment by providing a detailed analysis of the positioning of the client’s equity portfolio by style, region, country, sector and market cap because the wealth manager suspected that its portfolio had an unintentional ‘value’ bias due to its recent disappointing performance.
  • Using scenario analysis to inform decision-making: bfinance’s willingness to engage in early analysis and discussion allowed the client to assess the potential impact of making particular changes to its equity portfolio before undertaking a full manager search.
  • Understanding manager overlap and complementarity: with a strong understanding of the portfolio’s individual components, bfinance was able to advise the client on potential overlaps among its incumbent managers; considerations of ‘complementarity’ also featured throughout the search process to ensure that the proposed managers were truly differentiated from the client’s existing roster of managers.
  • Identifying a manager with a ‘top-down’ approach:in this esoteric asset class, where individual emerging markets can behave very differently, the client was keen to identify a manager with a top-down, country-led approach; through this search (and others), bfinance identified more than ten established GEM equity strategies that operate with a predominantly top-down investment process.