The 2022 Behavioral Alpha Award: Winners & Highlights

“We’re thrilled to be a 2022 Behavioral Alpha Award winner,” says Inigo Mijangos, co-portfolio manager of the top-ranked Brookfield Global Renewables & Sustainable Infrastructure portfolio. “Our business is built from the ground up around a repeatable, transparent, and fundamental data-driven investment process, and we’re proud to see it recognized in an assessment that’s focused on high-quality decision-making.”A number of interesting trends emerged since the last Behavioral Alpha Award assessment was conducted based on data through the first quarter of 2022. Among them:

• More managers got more decisions right. Across all decision types, about 23% of the managers in the assessment study had a hit rate above 50% — compared to 18% in the last ranking.
• At the same time, there was a decline in portfolios with positive payoff (that is, they added more value when they got a decision right than they lost when they got it wrong), from 68% to 63%.
• Overall, the percentage of portfolio managers whose decisions added value increased from 43% in the last ranking to almost 47% in the year-end assessment — a significant improvement.

“2022 was a very challenging year for long-only equity fund managers,” says Essentia Founder and CEO Clare Flynn Levy, “so it was reassuring to see an improvement over the course of the year in the percentage of portfolios where manager decision-making added value.”“We work with portfolio managers every day to focus on their decision-making process, the impact of those decisions, and how to continuously improve over time. As more managers embrace this decision attribution analysis and get better at this self-reflection, we hope and expect to see this number continue to increase.”

Source: Essentia Anaytics