ESSENTIA ANALYTICS ANNOUNCES 2022 BEHAVIORAL ALPHA® AWARD WINNERS
Innovative assessment ranks portfolio managers based on decision-making skill, not past performance
February 7, 2023 — London, New York — Essentia Analytics, the leading provider of behavioral data analytics and consulting for professional investors, today announced the winners of the 2022 Essentia Behavioral Alpha Award, a unique assessment that ranks portfolio managers based on their demonstrated investment skill, rather than their recent past performance.
The Behavioral Alpha Award is based on Essentia’s proprietary Behavioral Alpha® Benchmark methodology, which considers skill in seven key decision types: stock picking, entry timing, sizing, scaling in, size adjusting, scaling out, and exit timing. Each decision type is isolated and its impact measured in terms of value added or destroyed at the portfolio level.
The 2022 Award assessment examined 90 active equity portfolio managers over a 36-month period ending December 31, 2022. The five managers who achieved the highest overall scores were:
- Inigo Mijangos and Joseph Idaszak, Brookfield – Global Renewables & Sustainable Infrastructure
- Jonathan Good, Baird – Small/Mid Cap Growth
- Waldemar Mozes and Jonathan Brodsky, Harbor Capital Advisors/Cedar Street Asset Management – Harbor International Small Cap Fund
- Vishal Gupta, Morgan Stanley Investment Management – Emerging Markets Leaders
- Xavier Hovasse and Haiyan Li-Labbé, Carmignac – Emergents
“We’re thrilled to be a 2022 Behavioral Alpha Award winner,” says Inigo Mijangos, co-portfolio manager of the top-ranked Brookfield Global Renewables & Sustainable Infrastructure portfolio. “Our business is built from the ground up around a repeatable, transparent, and fundamental data-driven investment process, and we’re proud to see it recognized in an assessment that’s focused on high-quality decision-making.”
A number of interesting trends emerged since the last Behavioral Alpha Award assessment was conducted based on data through the first quarter of 2022. Among them:
- 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 (that is, they added more value when they got a decision right than they lost when they got it wrong), 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.
“2022 was a very challenging year for long-only equity fund managers,” says Essentia Founder and CEO Clare Flynn Levy, “so it was reassuring to see an improvement over the course of the year in the percentage of portfolios where manager decision-making added value.”
“We work with portfolio managers every day to focus on their decision-making process, the impact of those decisions, and how to continuously improve over time. As more managers embrace this decision attribution analysis and get better at this self-reflection, we hope and expect to see this number continue to increase.”
About Essentia Analytics
Essentia Analytics is the leading provider of behavioral data analytics and consulting for professional investors. 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 active fund managers measurably improve investment decision-making. Providing daily analysis on over $250 billion in assets, Essentia has uncovered an average of 150 basis points of alpha per year for its clients that was previously being lost to behavioral biases and decision-making deficiencies.