Lord, Abbett & Co. LLC, Jersey City, N.J., was second on the list with its microcap growth portfolio, delivering a gross return of 58.83% for the year ended Sept. 30. The diversified strategy has approximately 90 stocks in the portfolio, with an emphasis on technology, mass consumerism and modern medicine sectors, according to F. Thomas O'Halloran, partner and director of growth equities at Lord Abbett.
“It's a bottom-up, fundamental, research-driven strategy,” added Mr. O'Halloran.
Arthur Weise, a partner and portfolio manager at Lord Abbett who co-manages the portfolio with Mr. O'Halloran, noted it has done well investing in solar power, particularly with the San Jose, Calif.-based SunPower Corp.
O'Shaughnessy Asset Management, LLC, Stamford, Conn., saw its microcap equity strategy return 56.89% for the year. According to Jim O'Shaughnessy, chairman, CEO and chief investment officer, the portfolio holds about 120 names, narrowed via a series of composites from an investible universe of about 3,500 stocks.
The portfolio currently is most heavily weighted in the consumer discretion sector, followed by industrials and then information technology.
Top performing stocks include Alliance Fiber Optic Products Inc., Addus HomeCare Corp., American Pacific Corp., Information Services Group Inc., Gray Television Inc., Nexstar Broadcasting Group Inc. and Nutraceutical International Corp.
St. Louis-based Towle & Co. experienced a 55.2% return with its deep value strategy. Christopher Towle, president of the firm, attributed the strategy's success to being “contrarian, price-conscious and valuations sensitive.” He added “consumer discretionary group (stocks) have done very well,” and the firm has been “putting capital back to energy-related stocks and coal companies.”
Rounding out the top five, Wellington Management Co. LLP, Boston, saw a 53% return for its all-cap opportunities portfolio.
Granahan Investment Management Inc., Waltham, Mass., came in at seventh at 51% with its small-cap focused growth strategy. Andrew Beja, portfolio manager, said they seek “companies capable of sustaining growth at a pace of 15% or better for many years.” The portfolio has about 40 positions in business services, Internet companies and consumer companies. Top performers include CoStar Group Inc., Monotype Imaging Holdings Inc. and Tesla Motors Inc.
Rounding off the list of top 10 managers are New York-based Mazama Capital Management Inc., which makes the list twice, at No. 8 with its small-cap growth strategy, returning 50.4%, and No. 10 with its emerging small-cap growth portfolio, 47.2%; and Horizon Kinetics LLC, New York, landing the No. 9 spot with its small-cap institutional strategy at 49.8%.
Since there was a dramatic shift in not only this quarter's top performers, but also in the winning strategies, Mr. Kwon said it was difficult to determine in which way the market would go in the future.
“It's easier to determine what will happen when there's a trend forming, but this time something new is happening,” he noted.
In the five-year ranking, no one approach dominated. Four of the 10 strategies were energy and four were small-cap growth. The top five managers with the greatest gross returns over the five-year period were Atlanta-based Invesco Ltd.'s master limited partnership strategy with 30.34%; Tortoise Capital Advisors LLC's midstream MLP separate accounts strategy at 26.6%; Westwood Management Corp.'s MLP infrastructure renewal strategy at 25.68%; Granahan's small-cap focused growth strategy at 25.61%; and Allianz Global Investors U.S. LLC's ultra microcap strategy with 24.88%.
The five-year median return was 11.55%, above the Russell 3000 index for the same period at 10.58%.
In the collective investment trust universes, five of the top 10 performers for the year ended Sept. 30 were blend managers.
The top manager was Wellington with its CIF II small-cap opportunities fund, with a one-year annualized gross return of 40.99%.
The Boston Co. Asset Management LLC's small-cap opportunity value equity fund returned 40.7%, while Frontegra Asset Management's small-cap core fund returned 38.2%.
Wellington's CIF II midcap growth S1 strategy returned 36.85%. Meanwhile, Hillsdale Investment Management Inc.'s filled out the top five with its U.S. Performance Equity Fund at 35.39%.
“We employ a multistrategy approach,” said Harry Marmer, executive vice president, institutional investment services at Hillsdale, Toronto. “This results in a core investment style, which we think will be more consistent over time than either a "value' or "growth' style.”
Pyramis Global Advisors' small cap core pool returned 35.4%, while the Boston Co.'s midcap opportunity value equity cap fund returned 35.2%.
Two of Brandywine Global Investment Management LLC's strategies, the diversified small-cap and dynamic large-cap value, made the list, returning 34.41% and 34.37%, respectively.