Active management the new buy-and-hold?

With two huge bear markets in recent memory — and buy-and-hold tactics open to question — the popularity of active strategies has never been greater
MAY 08, 2011
With two huge bear markets in recent memory — and buy-and-hold tactics open to question — the popularity of active strategies has never been greater. Witness the new recruits the National Association of Active Investment Managers is attracting. NAAIM last week welcomed 32 new members at its annual meeting in San Diego, up 20% from last year, according to NAAIM president Ian Naismith. The group has about 140 member firms, which run $25 billion for individual clients in niche mutual funds and under contract for other advisers. Most of them use momentum-style strategies, based on technical analysis, to reduce risk. There's been “astounding” growth among advisers who use active strategies, said Mr. Naismith, who is also co-founder of Sarasota Capital Strategies Inc., which manages $48 million and runs The Currency Strategies Fund Ticker:(FOREX).

SUCCESS SHOWS

NAAIM members “have been successful in managing money,” said Catherine Ayers-Rigsby, chief executive of Ceros Financial Inc. “A lot of them were the original alternative managers” before alternatives became popular, she said. Ceros, a broker-dealer that holds $4.2 billion in custody for 90 active advisory firms, hosted a companion conference prior to the NAAIM meeting. Advisers who market themselves for their money management expertise don't keep clients unless they perform, said Jerry Jacobs, president of Atlas Capital Management Corp., who runs about $200 million for other advisers who use his timing service. NAAIM members said they did relatively well during the 2008-09 financial crisis, thanks to risk-control techniques. “A lot of NAAIM firms are [near] all-time asset highs,” Mr. Naismith said. “Buy-and-holders can't say that at all.” Despite the interest in tactical approaches, the NAAIM event is small potatoes compared with some much larger adviser gatherings. Its conference attracted 198 individual attendees. By contrast, the Financial Planning Association's annual meeting attracts about 2,500. NAAIM bills itself as something different, offering its members intimate opportunities to share trading strategies as well as practice management ideas. Attendees weren't surprised at the relatively big turnout at the event, given the terrible markets. E-mail Dan Jamieson at [email protected].

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