How do you find the best income management stars of tomorrow? Morgan Stanley believes it has the answer.
Its wealth management arm has developed a new form of manager analysis which revolves around a screening and scoring process designed which has been developed by the firm’s Global Investment Manager Analysis team (GIMA). It is believed that the process can better analyse income managers and increase the odds of selecting those with the potential to excel going forward.
“One of the keys to the process is finding fixed income managers that have been able to outperform their peer groups in environments that have been unfavorable for active manager relative performance,” said Matthew Rizzo, Morgan Stanley Wealth Management Strategist.
“We believe that managers that performed well when conditions were most difficult and were able to do so with a degree of consistency may be more likely to possess investment skill, as opposed to managers that performed well primarily when conditions were in active managers’ favor.”
The concept is part of Morgan Stanley’s ongoing efforts to enhance its investment results for financial advisors and clients. The active component of the process will look for managers that run portfolios that are truly differentiated from their benchmarks.
By combining the adverse and active components together, the Adverse Active Alpha tool is able to derive a pool of fixed income managers with greater potential for outperformance.