ARGA stands out in the latest three-year assessment as most decision categories improve.
Our latest Essentia Behavioral Alpha Benchmark ranking, covering the three years ended June 30, 2026, shows a broad rebound in decision quality following a weak first quarter. Across 199 active equity portfolios — our largest ranking universe to date — the median Behavioral Alpha Score rose to 49.0 from 48.1 at the March 31, 2026 assessment.
The percentage of portfolios adding value through their overall decision-making increased to 41.7%, from 37.0% in the prior ranking. The median Behavioral Alpha score nevertheless remained below 50, the threshold for value-additive decision making.
Among the Top 5 portfolios, ARGA Emerging Markets Equity advanced from No. 4 to No. 1, with a Behavioral Alpha Score of 71.4. The ARGA EAFE Fund rose from No. 11 to No. 5, giving ARGA two portfolios in the Top 5.
DWS Swiss Equity High Conviction entered the Top 5 at No. 2, with a Behavioral Alpha Score of 70.3. Franklin India Flexi Cap held fast at No. 3, while Silvercrest International Small Cap Value moved up one place to No. 4.
About the Behavioral Alpha® Benchmark
The Essentia Behavioral Alpha Benchmark (EBAB) is the investment management industry’s only systematic assessment of decision-making skill. Unlike traditional rankings based on past returns, EBAB evaluates how portfolio managers make investment decisions over a 36-month period, isolating skill from luck and market movements.
Using proprietary decision attribution analytics, the ranking assesses managers across seven key decision types. A manager’s Behavioral Alpha Score (BA Score) is calculated based on their hit rate (percentage of decisions that add value) and payoff ratio (the magnitude of good vs. bad decisions).
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.
A Behavioral Alpha Score above 50 indicates consistent value-additive decision-making. And recent research shows that managers with BA Scores over 50 are 1.5x as likely to outperform their own benchmarks over the subsequent 12 months as managers with BA Scores less than 50. Managers who have demonstrated good decision-making over the last 3 years have been more likely to go on to outperform.
It is possible for a manager who has been underperforming to have a BA Score over 50, implying that they are undervalued by performance-based metrics. Likewise it is possible for a manager who has been outperforming to have a BA Score under 50 — in other words, to have gotten lucky. That has implications for fund managers and fund selectors alike. Essentia is carrying out further research in this area, so watch this space!
Top 5 Managers for the 3 Years to 30 June 2026
The most recent 36-month assessment concluded on June 30, 2026, evaluating the demonstrated decision-making skill of 192 active equity mutual fund and investment-trust portfolio managers using the Behavioral Alpha Score. The Top 5 managers are as follows:
| Rank | Manager(s) | Portfolio |
| 1 | Team Managed | ARGA Emerging Markets Equity Fund |
| 2 | Illya Lebedynets | DWS Swiss Equity High Conviction Fund |
| 3 | Janakiraman Rengaraju Rajasa Kakulavarapu Sandeep Manam |
Franklin India Flexi Cap Fund |
| 4 | Robert Choi, Al Chan, Chris Richey, Kevin Hill and Ron Dornau | Silvercrest International Small Cap Value Fund |
| 5 | Team Managed | ARGA EAFA Fund |
Key Takeaways and Notable Trends
- ARGA led the ranking and placed two portfolios in the Top 5. ARGA Emerging Markets Equity Fund advanced three places to No. 1, while ARGA EAFE Fund moved from No. 11 to No. 5. DWS Swiss Equity High Conviction Fund was a new Top 15 entrant and placed second.
- Decision-making outcomes rebounded, but remained below the value-additive threshold. The median BA Score increased by 0.9 points to 49.0, while the percentage of portfolios adding value rose by 4.7 percentage points to 41.7%.
- Better payoffs drove the improvement. The percentage of portfolios with payoff ratios above 100% rose by 4.3 percentage points to 54.3%, and the median payoff increased to 104.3%. The percentage with hit rates above 50%, however, declined slightly to 18.1%.
- Managers generally added value through exit timing, but continued to lose value while scaling out. Exit timing has been a net positive for the median manager in all 11 quarters examined in the growing Benchmark database. Scaling out has been the weakest decision category in every quarter, with only 17.6% of portfolios adding value through it in the latest ranking.
- Most portfolio managers are “right” less than half the time — but this does not necessarily prevent them from adding value. This quarter, for example, only 4.5% of portfolios had a stock-picking hit rate above 50%, yet 44.2% added value through stock selection. Across the all-time Benchmark database, those figures were 6.3% and 42.3%, respectively.
Next week, we will publish a deeper analysis of the growing Behavioral Alpha Benchmark database, including what low hit rates really mean, why scaling out remains a persistent source of lost value and where managers have most consistently added or destroyed value.
More data and results are available through Essentia’s Behavioral Alpha Benchmark app, which provides access to all mutual funds, active ETFs, and SMAs in the Benchmark database. Insight Pro users can drill down on a portfolio’s Behavioral Alpha Score for greater visibility into which decision types have added or destroyed the most value.
Portfolios with Behavioral Alpha Scores > 50 (which appear to the right of the dotted line) have managers who have been adding value through their overall decision-making over the last three years. Those with scores < 50 (to the left of the line) have been destroying value.
How the BA Score is Calculated
The Behavioral Alpha Score (BA Score) is determined using a systematic approach that evaluates investment decision-making skill over a 36-month period. The methodology isolates skill from market conditions by analyzing managers’ hit rates (the percentage of value-added decisions) and payoff ratios (the relative impact of good versus bad decisions).
Each manager’s score is benchmark-adjusted and calculated based on seven key decision types:
- Stock selection – Did the manager choose stocks that outperformed the benchmark over the last 3 years?
- Entry timing – Did the manager add value through the precise timing of their entry?
- Sizing – Did the manager add value through capital allocation decisions, compared to running an equally-weighted portfolio?
- Scaling in – Did the manager add value through the way they scaled into their positions, or would a basic algorithm have done just as well?
- Size adjusting – Did the manager make beneficial mid-position adjustments?
- Scaling out – Did the manager add value through the way they scaled out of their positions, or would a basic algorithm have done just as well?
- Exit timing – Did the manager add value through the precise timing of their exits?
Aggregate trends from our prior rankings (all based on 36-month timeframes):
| Median BA Score | Percent of portfolios adding value |
Percent of portfolios with a hit rate over 50% |
Percent of portfolios with a payoff over 100% |
|
| Ending 2026-Q2 | 49.0 | 41.7% | 18.1% | 54.3% |
| Ending 2026-Q1 | 48.1 | 37.0% | 18.8% | 50.0% |
| Ending 2025-Q4 | 47.7 | 39.3% | 19.0% | 50.3% |
| Ending 2025-Q3 | 49.3 | 48.1% | 21.8% | 56.4% |
| Ending 2025-Q2 | 50.6 | 53.4% | 21.4% | 67.9% |
| Ending 2025-Q1 | 47.8 | 40.2% | 22.1% | 51.6% |
| Ending 2024-Q4 | 48.7 | 43.0% | 31.7% | 55.7% |
| Ending 2024-Q3 | 49.3 | 48.3% | 22.5% | 57.3% |
| Ending 2024-Q2 | 50.3 | 55.7% | 21.6% | 63.6% |
| Ending 2024-Q1 | 51.4 | 56.9% | 25.0% | 65.3% |
| Ending 2023-Q4 | 50.3 | 52.5% | 30.8% | 62.5% |
| Ending 2023-Q3 | 50.6 | 53.3% | 24.4% | 67.8% |
| Ending 2023-Q2 | 50.9 | 56.5% | 28.2% | 71.8% |
| Ending 2023-Q1 | 51.6 | 63.6% | 28.4% | 79.5% |
| Ending 2022-Q4 | NA | 46.7% | 23.3% | 63.3% |
About Essentia Analytics
Essentia Analytics is the leading provider of behavioral data analytics services to professional investors and allocators of capital. Led by a team of experts in investment management, technology and behavioral science, Essentia combines next-generation decision attribution analytics technology with human coaching to help both equity fund managers and allocators identify investment skill and bias — and capture performance that was previously being lost to decision-making deficiencies.
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