The firm not only seeks pockets of value around the world in inefficient markets that aren't well covered, but also pays particular attention to monitoring new funds and breakaway portfolio managers with smaller amounts of money to play with.
"Basically, it's our belief that in some cases with new mutual funds it's almost like you're getting a hedge fund at the cost of a mutual fund," says Andrew Altfest, "and that can be very good in areas in which how much money you manage is important-like small cap and international small cap."

The team at Altfest, which has $850 million in assets under management, is currently looking at new opportunities in emerging markets and international small cap. "Everything is valuation conscious," says Andrew.

If an investment is so popular that clients are asking for it, that's not a good sign, he says. Take the Facebook IPO, which the firm discouraged its clients from participating in. "The valuations were just incredible. You could see that people would be cashing out once they were able to."

Aurum Wealth Management Group
Cleveland, Ohio
Michael T. McKeown, Director of Research
Some jazz musicians like to play in two keys at the same time. Michael McKeown and his partners at Aurum Wealth Management Group also like mixing up modes, specifically using different investment styles to come up with something it calls "ultra modern portfolio theory." His five-person research team's approach is to assemble multi-asset, multi-manager portfolios and diversify portfolios by risk.

He and the firm's two principals, Eric Wulff and Chris Bart, hail from Morgan Stanley, which they left in 2006 to pursue their more holistic approach. When it came to investments, McKeown says, "at Morgan Stanley, we generally had the pre-approved box. They had shut down the third-party channel that we had been using previously. As we left, we actually gained more tools to analyze investment managers and frankly better access to the managers, the products, the portfolio specialists and the portfolio managers as well."

He says Aurum tries to take a margin-of-safety approach like Benjamin Graham or Seth Klarman. "While some managers might take that to the individual stock level, we really try to apply that to see: Is there a margin of safety in certain asset classes? ... So we'll have target allocations that we want to be at over the long term. But we will tactically allocate and underweight. For example, right now we're underweight in [REITs]. We just feel like there's not a margin of safety within that sector."

One pet fund the firm likes is the newly launched Wells Fargo Advantage Absolute Return Fund, which invests in GMO's Benchmark Free Portfolio. "It's an unconstrained portfolio that has an institutional track record that goes back about 10 years. We like that approach: taking the shackles off a manager and really allowing their research to drive them toward the best portfolios without giving them an arbitrary benchmark to try to beat." Such a striving for risk-adjusted performance and the ability to go anywhere is important when there "isn't a huge fat pitch for equities or fixed income," he says.

Aspiriant
Los Angeles
Jason T. Thomas, Chief Investment Officer
Jason Thomas, the CIO of both Aspiriant and its predecessor, Kochis Fitz, sees the world through the lenses of a economist, unlike those who learned the ropes as traders, accountants or bankers. He also spent time consulting with institutions at Wilshire Associates, developing a covetous eye for the lush investment fields that pensions and endowments got to poach, stuff unavailable even to the wealthy.

He says those twin experiences have helped him put his own stamp on the Aspiriant research team. The process there, very different from other firms, is to first take a 20-year macro-economic view of the world.

"I believe that all returns in the end are going to come from economic activity and that's what we should look at first. Whereas most people go out and say, 'Let's find great managers and they'll tell us what to do.'"

The 20-year view helps the firm determine what the allocations are going to be and how the firm wants to participate, and then deploy the particular strategies in equities and fixed income. By the time the team starts talking to asset managers, they have a very specific idea of what they want to do, and that allows them to narrow the choices.