Five different investment styles made up the top 10 overall equity rankings for the year ended June 30, according to Morningstar Inc.'s separate account/collective investment trust database.
Six of the top 10 overall strategies were large cap, with two blend, two growth and two value strategies. Small-cap growth and real estate each had two managers in the overall top 10.
The median return for all separately managed stock portfolios in the Morningstar database was 0.18% for the 12 months ended June 30, while the Russell 3000 index returned 3.84%.
The heterogeneous makeup of this quarter's top 10 is in stark contrast to the previous quarter, when eight of the top 10 were large-cap growth managers, according to Diana Scott, product development manager for separate accounts with Morningstar in Chicago.
Because of the wide variety of investment styles represented in the top 10, the primary reason these strategies made the top of the list is simply that “they produced marginally better returns than others,” said Ms. Scott.
“To make a long story short, "What's going on?' is the question that everyone wants the answer to. There is no clear cut answer,” she said.
The top performer for the year was Granahan Investment Management Inc.'s Small-Cap Focused Growth portfolio, with a gross return of 19.57% in the year ended June 30.
The strategy is one of four for the boutique small-cap growth firm.
“We've got nine people doing nothing but small-cap growth research,” said Andrew Beja, managing director and portfolio manager for the Waltham, Mass.-based investment manager.
“We think it's a very attractive asset class,” Mr. Beja said. The focused growth product, which just hit its five-year mark in July, consists of what Mr. Beja said are “companies we'd take to a desert island for five to seven years.”
The firm selects stocks best able to sustain earnings growth of at least 15% over that time period, stocks that have both “attractive risk/reward and ... very good expected returns and we're very disciplined about both,” according to Mr. Beja.
“We look at companies that can grow year in, year out at that 15%. If the Russell 2000 broad group of companies (is) not growing at that 15% and ours do, we're starting off in a pretty good spot,” he said. “We're very disciplined on the risk/reward, particularly on the downside of that equation and it can work particularly well when people are chasing a sector or factor that's not part of our discipline.”
“Small-cap growth is ripe with very attractive growth companies, but if you're not careful with risk/reward it can very treacherous and we pay attention to that.”