Active Managers | Wisdom, Wealth, and Wellness

Jonathan Satovsky
CFP®, ChFC®, CIMA®, CPWA®, CDFA®, DACFP

Good morning, good afternoon, good evening. Depending on the part of the world you’re in. This is Jonathan Satovsky of Satovsky Asset Management and on today’s episode of “Seeking Wisdom, Wealth, and Wellness,” I want to talk about the process of picking active managers.

What is the purpose and outcome you’re seeking to get? Perhaps you want better risk-return attribution. Perhaps you want downside protection. Perhaps you think there’s some asymmetry that the manager can get greater upside and less downside.

When you benchmark a particular active manager, whether in fixed income or in equities or real estate or alternatives, and you use a passive index, and even a potentially investable passive index, to measure and report the success or failure of the execution of that manager, do you recognize that in advance you have some big hurdles to overcome?

Fees, taxes, and behavioral risk.

Why is that an issue? Because as soon as you’re evaluating that manager, whether it’s in a quarter, in a year, in three years, in five years, even in ten years, you’re going to have experiences, likely – even if they’re the best in the world – 40% of the time, they’re going to be in the bottom quartile or decile of all of the managers in that particular category. And you got to ask yourself, are you going to be able to sit still and even increase your exposure during a time of maximum pain? If you are, and you believe in it philosophically to overcome those hurdles, good luck on your path to Wisdom, Wealth, and Wellness.

Otherwise, simplify.

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Video Recorded May 5, 2023
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Disclosures

This blog post is not intended to be, nor should it be construed or used as, an offer to sell, or a solicitation or offer to buy any securities or interests in any strategy offered by Satovsky Asset Management, LLC (“SAM”). SAM is a registered investment advisor with the Securities and Exchange Commission – for more information see www.adviserinfo.sec.gov. Please remember that different types of investments involve varying degrees of risk, and that past performance is not indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the strategies recommended or undertaken by SAM) will be profitable. Market index information shown herein is included to show relative market performance for the periods indicated and not as standards of comparison. The market volatility, liquidity and other characteristics of SAM’s portfolio composition are materially different from the securities listed on public market indices. Market index information was compiled from sources that SAM believes to be reliable. No representation of guarantee is made hereby with respect of the accuracy or completeness or such data. Opinions are as of date of video and are subject to change. A copy of SAM’s current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request. SAM undertakes no duty to update information presented herein.

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