We use this space to provide market commentary, but would also like to take the chance to highlight investment managers who make up the Pension Boards investment program. By so doing, we aim to explain our decision- making process, and provide additional transparency into your investment options.
As such, we would like to spotlight William Blair, an Equity Fund manager for the Pension Boards since 2011. William Blair was founded in 1935 and is headquartered in Chicago. William Blair has more than 1,200 employees and manages more than $77 billion on behalf of clients.
William Blair's asset management organization invests money in what can be best described as Quality Growth-style strategies. In a nutshell, they have been focused for us on finding favorable returns from the universe of U.S. small- and mid- capitalization (SMID) public companies that are growing at a rate above the general level of economic growth, but which hold promise to sustain that level of growth over time. In addition, they pay a huge amount of attention to quality of management, quality of earnings, and quality of businesses. William Blair's style differs from most other managers because they incorporate both quantitative and fundamental styles; most managers utilize one or the other. The quantitative factors that make up the Blair model in this case are: Quality (40% of the overall score), Valuation (30%), Earnings Trend (20%), and Momentum (10%). William Blair is continuously refining and reevaluating the model to make sure it is optimal. Once the model has helped narrow the universe to make it manageable, the analysts take over and study each company by researching the industries, speaking with the management teams, and making recommendations to the portfolio managers, who then construct the final portfolio.
How have they done? Over the three years ended June 30, 2015, the William Blair SMID portfolio has returned 21.93% (net of management fees) versus 20.355% for their index, and versus 17.31% for the Standard and Poor's (S&P) 500 index of common stocks.
Maybe just as importantly for the Pension Boards, William Blair also incorporates Environmental, Social, Governance (ESG) factors in their analysis. Companies are ranked on ESG issues and these scores can be integrated into final rankings. William Blair conducts some of the ESG analysis themselves but they also use the latest data available from third-party experts. Additionally, Blair is a signatory to the United Nations Principles for Responsible Investing (UNPRI).
Recently, the Investment Committee of the Pension Boards, informed by staff and consultant recommendations, also approved William Blair to manage part of our emerging markets allocation in the Equity Fund. Blair began managing this allocation in July of 2015.
William Blair's Small-Mid and Emerging Markets strategies are now both part of the Equity Fund. As such, they are also parts of the Balanced Fund, and the Target Annuitization Date (TAD) Funds.
We hope that you have found these Pension Boards' manager details interesting!