Freedom Capital Management LLC
Principals: Michael Spencer, CIO; Terry Gerlich, Bruce Kaser and Raymond Depelteau, principals.
Style: Fixed-income and large-cap equity growth manager
AUM as of June 30: $2.7 billion
Three-year annualized return: 9.29%
Benchmark (Lehman Brothers Government/Corporate): 10.83%
Three-year alpha: 0.55
The Royal Bank of Canada's purchase of Freedom Securities, the holding company for Freedom Capital Management Corp., in 2001 spurred Michael Spencer and his partners to buy the institutional business from Freedom and start out on their own. All four principals had been working for Freedom Capital Management; they continue to use the same style they used there.
While most of their assets are invested in equity accounts, it is the fixed-income approach that helped them make this list. The fixed-income overweights higher yielding corporates and mortgage-backed securities, because the yield has been good, Mr. Spencer noted. "The corporates are BBB or higher. Over time, the duration and sectors are adjusted. Currently, the portfolio includes Kinder Morgan (Inc.), Comcast (Corp.) and Sovereign Bank Corp."
The equity large-cap core portfolio is organized thematically. "We look at parts of the economy that are growing faster than the economy as a whole, and then do basic fundamental research to pick growth stocks in those areas For example, people are getting older, so over time companies catering to those demographics should be growing faster than the economy," he said. Among the stocks in the portfolio are Zimmer Holdings Inc., Williams Cos. and 3M Co.
"We like them for their personal service," said Dan Owens, executive director of the $130 million Holyoke (Mass.) Retirement System. "When we call they get right back to us, unlike some managers, who can take a long time. They also have a couple of people there (who) worked on the pension side before, which has been very helpful to us…
"They have done well for us, too. We've got about $40 million with them in their aggregate bond fund, which is up about 80 points. We love them!"