Sticking with our tradition of giving the upcoming year a tag line, “From Double-Dip to Buy the Dips” is the most popular from our Investment Policy Committee and probably the best way to summarize our 2011 outlook. WrapManager believes many of the uncertain themes of 2010 have now passed. We also agree with several of the money managers we follow who feel that we are on a clearer path down recovery road. In fact, we believe the economy is recovering and moving into an expansionary phase. The much talked about “New Normal” seems to be nothing more than the “Old Normal”, with our newer investors desiring to take more risk and suggesting that they’d like to outperform their benchmarks.
We feel our 2011 Top Equity Money Manager Picks compliment our theme well. Regardless of your personal outlook for 2011, we think you’ll find these money managers intriguing. For those who followed our 2010 picks and their performance last year, we hope you are pleased with the results – we certainly are. We look forward to seeing how our picks fare in the coming year as well.
This Year’s Money Managers
This year our Investment Policy Committee selected nine equity money managers that, if suitable for you, could help you position your portfolio well for 2011 and the expansionary phase we believe we’re starting. They include a dividend focused strategy, an international strategy, small cap strategies, and all cap strategies. A few veteran managers from our 2009 and 2010 picks made this year’s list as they continue to meet and exceed our expectations. We are excited to add four newcomers to the list and feel that they may further help clients diversify and position their portfolios.
Whatever your outlook, we hope you find a manager of interest that you’d like to learn more about. If you do, just give one of our Wealth Strategists a call at (800) 541-7774.
Summary of WrapManager’s 2011 Outlook
We believe the economy has recovered well and is now entering an expansionary phase. A 3-4% GDP number this year is very possible, supported by business growth and pent up consumer demand. The latest GDP number from the fourth quarter of 2010 came in at 3.2%. Stocks appear cheap trading at 13.1 times forward earnings on the S&P500 as of December 2010, well below the historical average of 16.5. Taking a middle ground 14x earnings and an estimated $95 operating earnings on the S&P500, you get a year end target of 1330. We think we could end the year around 1380 and probably encounter a few ups and downs along the way.
Unemployment will hopefully decline to 9%, possibly creating 2-3 million jobs on the way down thanks to accelerated hiring. Interest rates could see a 3.5% on the 10-Year Treasury and 4.5% on the 30-Year Treasury by year end. We do not see inflation becoming an issue until unemployment starts to dip below 8%. And finally, we expect the international markets and economies to continue their recoveries, supporting a US and global recovery along the way.
If you would like to read our entire 2011 outlook, just click here to read it in last month’s newsletter.
Money Managers 2011
Enjoy the report and remember we are here to help if you have any questions or would like additional information on our picks or any other money managers. We help investors like you develop a sound plan, choose money managers and better understand their financial situation. Perhaps even more importantly, we help them develop investment strategies, matching them to their unique goals and risk tolerances, while using what we believe are some of the best money managers available. Successful investing requires balancing return against risk, and proper asset allocation helps investors take advantage of opportunities without taking unnecessary risk.
We’ll gladly help you gain insight into your portfolio and finances and help choose your money managers. It’s easy, valuable, and of course free. Get started by completing a few brief questions here, or speak with one of our Wealth Strategists now by calling (800) 541-7774.
Eagle Asset Management
Style: Small Cap Growth
If you’re looking for a Small Cap Growth strategy, this could be a good option. Eagle’s Small Cap Growth strategy seeks to create a portfolio that should have less risk than its benchmark while outperforming it over a market cycle. With over 50 years of investment experience, Eagle’s portfolio managers try to gain a thorough understanding of a company’s management, business plan, and competitive threats and advantages by visiting the companies, talking to their suppliers and even questioning competitors.
Geneva Advisors
Style: All Cap Growth
If your primary objective is growing long-term wealth, this strategy could be for you. Since 1993, Geneva’s flagship growth investment strategy has looked to invest in companies with high levels of sustained profitable growth. Companies in this strategy are projected to produce both strong near-term and long-term earnings increases. To assist their in house research, the portfolio managers use a proprietary quantitative valuation model that they have developed over the last decade.
Legg Mason / Clearbridge
Style: Multi Cap Growth
This strategy offers a long-term buy-and-hold strategy, and is designed for those seeking a growth portfolio with the ability to invest in a wide range of company sizes. With 34 years of experience, lead portfolio manager Richard Freeman believes a true growth portfolio should consist of stocks that can be held not for a quarter or two, but for many years so that earnings and/or cash flow growth can compound over time.
Tradewinds Global Investors
Style: Multi Cap Opportunities
The Tradewinds Multi-Cap Opportunities strategy may be good for investors looking to diversify in a wide range of companies. Their objective, if successful, is to preserve and create your wealth, on an absolute and relative basis. Tradewinds likes value companies as they are unwilling to pay more for a security than it is intrinsically worth. Company attributes sought include sustainable competitive advantages, strong fundamentals, product leadership, and misperceived balance sheets. Importantly, their analysts try to adhere to their value style even when market pressures exist to chase momentum/theme stocks.
Calamos Advisors LLC
Style: All Cap Growth
Calamos is an active growth manager, striving to reward investors for any active risks that are taken. Their opportunistic and flexible investing approach helps them to find growth opportunities, supporting their focus on long-term risk-adjusted performance. Attempting to maximize returns while managing volatility on the downside, Calamos could be a manager for you to consider.
Wentworth, Hauser and Violich
Style: International Equity
We like this International strategy and the man behind the portfolio, Richard Hirayama. Instead of focusing on country or regional-specific events, he tries to correctly invest in mega trends and super cycles that last several years, like the demand for energy. Mr. Hirayama sees the world’s investment landscape with two dominant global forces: 1) globalization of the business world by economic sectors and 2) categorization of stocks by sectors rather than country of origin.
The Roosevelt Investment Group, Inc.
Style: All Cap Core Equity
If you’re thinking President Roosevelt, you are correct. Roosevelt Investment Group was named after President Theodore Roosevelt and still manages money for Theodore Roosevelt Association in addition to several members of the Roosevelt family. Their All Cap Core Equity strategy is designed to play both offense and defense. Its objective is to capture the upside of a positive market, while protecting the portfolio against the downside risks of a negative market.
Federated Investors, Inc.
Style: Strategic Value Dividend
While we like dividends, Federated loves dividends. Their strategy, with a dividend yield of just under 4.9% at the end of 2010, invests in companies they believe will increase their dividend over time. As a result, 38 of the 50 securities held in the strategy have increased their dividend and no companies cut their dividend for the past 12 months (as of 12/31/2010). Going along with our investment themes for 2010 and 2011, we believe using a dividend strategy could be beneficial to those seeking income and diversity.
Janus Capital Management LLC
Style: Opportunistic Alpha
This strategy offers contrarian and non-consensus investing, regardless of company size or geography. Portfolio manager David Decker emphasizes the quality of a company and management’s ability to create value for shareholders over the long term. With this strategy, you have to have the conviction to invest where others are not, which can be uncomfortable at times.
Next Steps
We hope you enjoyed reading about this year’s money manager picks. We’ll gladly help you gain insight into your portfolio and finances and help choose your money managers. It’s easy, valuable, and of course free. Get started by completing a few brief questions here. One of our Wealth Strategies will get in contact with you shortly during our normal business hours to walk you through the process and answer any questions you have. If you’d like to speak with one of our Wealth Strategists now, just give us a call at (800) 541-7774.
The opinions expressed are as of February 10, 2011 and may change as subsequent conditions vary. Information provided in this report is for educational and illustrative purposes only. This material is not intended to be relied on as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The information and opinions contained in this material are derived from sources deemed reliable, are not all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. This is no guarantee that any forecasts made will come to pass. The S&P 500 Index is widely considered representative of the US equity market. Index returns do not reflect any fees or expenses. It is not possible to invest directly in an index. WrapManager, Inc. is not a tax advisory firm. We recommend you contact your tax attorney or CPA prior to utilizing any of the tax-related strategies mentioned or discussed. Returns and experiences will vary for each client. Each client’s risk tolerance and investment objectives are unique to them. Opinions expressed are those of WrapManager, Inc. and are subject to change without notice and are not necessarily those of Prospera Financial Services, Inc., its directors, parent company or its affiliates. Securities offered through Prospera Financial Services and cleared through First Clearing, LLC. Prospera Financial Services - Member FINRA/SIPC.