Archives: News

Sage Launches Credit Index to Track Highly Liquid ESG Securities

AUSTIN, Texas, Sept. 28, 2017 /PRNewswire/ — Sage Advisory Services (“Sage”), a fixed income investment management firm, has launched the Sage ESG Intermediate Credit Index, with Wilshire Associates retained as index consultant and calculation agent. The index uses Sage’s proprietary ESG factor analysis framework and rules-based selection process. It is designed to maximize exposure to positive Environmental, Social & Governance (ESG) characteristics, while maintaining a high level of liquidity.

The index uses a three-pronged approach to select between 100-120 investment grade securities with a minimum tranche size of $500 million from the Barclay’s Intermediate Credit Bond Index, and an issuance date within the last three years.

To be selected, securities must meet a proprietary ESG score, fall within the top third of the group to which Sage categorizes them, and meet a controversy rating that flags to investors potential environment and social risks associated with the security.

“ESG is rapidly gaining traction within both institutional and individual investors, and we’re seeing the positive impact of these conscious investments across a wide range of sectors and causes,” said Robert G. Smith, President and Chief Investment Officer at Sage Advisory. “With the Sage ESG Intermediate Credit Index, we’ll achieve our goal of providing an institutional quality index that further accelerates the momentum gained to date.”

In a recent Sage study, the firm found that excess returns for ESG investing over the past 20 years have correlated positively with both growth and quality. Sage found that ESG excess returns do not have a close relationship with the size factor, and their relationship with low volatility has flipped since the financial crisis.

For additional information on the Sage ESG Credit index, visit http://wilshire.com/indexcalculator/poweredbywilshire.htm.

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Sage Unveils Customized Muni Strategy to Capitalize on Rising Rates, Favorable Taxes

AUSTIN, Texas, Sept. 6, 2017 /PRNewswire/ — Sage Advisory Services (“Sage”), a fixed income investment management firm, has launched a new Customized Laddered Strategy (C.L.I.M.B.) strategy that offers high liquidity, optimal risk/reward characteristics and favorable tax status.

Sage’s C.L.I.M.B strategy enables clients to set a maximum maturity range and realize consistent cash flows from maturity and coupon payments. Sage enhances the return potential relative to traditional laddered strategies by actively managing state, sector, and credit weightings within each maturity bucket. Additionally, Sage can provide a higher degree of liquidity to clients that encounter unexpected cash flow needs or would like to reallocate to a different asset class.

This multi-discipline investment approach enables Sage’s portfolio management team to adjust portfolio characteristics to maximize return opportunities for both institutional and retail clients, while reducing risk exposure when necessary.

Additional benefits include:

  • Actively managed municipal ladder approach with a competitive fee structure
  • Ability to customize based on client’s unique investment objectives
  • Comply with Fiduciary Standard by adding another layer of research and analysis
  • Access to municipal bond inventory across all broker/dealers, not just internal offerings

“Investment goals of both institutions and individuals have evolved as a result of changing market structure and regulatory oversight,” said Robert Smith, President and Chief Investment Officer at Sage. “Our goal with our new Customized Laddered Municipal Strategy was to offer a flexible investment solution that not only reflects changing investor needs, but also simpler approach to traditional fixed income investing.”

Sage Advisory Services is a pioneer in purpose-driven investment solutions, offering a variety of strategies and tailored approaches that utilize a combination of traditional fixed income instruments. With a diverse client base and total client assets exceeding $12 billion, Sage has also engineered a variety of Tactical ETF, ESG and retirement investment strategies.

About Sage Advisory Services
Sage is an independent investment management firm headquartered in Austin, TX, that serves the institutional and private client marketplace with traditional fixed-income asset management, global tactical ETF strategies and liability-driven investment solutions. As of September 2017, Sage manages and advises over $12 billion in client assets.

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Wilshire Expands Custom Client ‘Powered by Wilshire℠’ Index Suite, Announces Availability of Sage ESG Intermediate Credit Index℠

We are pleased to announce the availability of a new Powered by WilshireSM index designed by Sage, the Sage ESG Intermediate Credit IndexSM (GUDBESG). The objective of the index is to maximize exposure to positive Environmental, Social and Governance (ESG) characteristics, while maintaining high liquidity. To view the Press Release, Fact Sheet, and Index Methodology please click here

Letter From The CIO

 

Dear Clients and Friends,

We are proud to announce that Sage Advisory has been recognized as the “ETF Strategist who provides the Best Global Insight” at the 13th Annual Global ETF Awards®, hosted by Exchange Traded Funds. This is a first-time win for Sage, and we are honored to be recognized in this way by our global peers.

With a crowded investment landscape and an increasing numbers of ETF products and services, we are particularly pleased to have captured this distinction, in which winners are identified based on a survey of over 1,250 institutions globally, including RIAs, pension plans, investment managers and insurance companies, among others. With a strict process to ensure voting exclusively by industry participants, this award win validates our commitment to excellence as a leading ETF strategist and asset manager, and reinforces our two decades of exceptional service, outcomes and insight.

At Sage, we are not only upholding our status as a leading asset manager, but also innovating and expanding our services to meet market and client demands. This includes the rollout of three ESG portfolios, including a global equity portfolio focused on ETF allocations.

We continue to draw attention for our asset allocation and market perspectives, evidenced by ETF.com’s recent Q&A featuring our Managing Director Rob Williams, where he discusses the benefits of tactical investing, the outlook for fixed income markets and more.

As Sage wins recognition from our peers and the larger investment community, we want to thank you for your business and continued support, and look forward to more great news in the months and years to come.

Sincerely,

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Robert G. Smith, III
President & CIO

 

Sage Welcomes…

June 16, 2016

Dear Clients and Friends,

We are very pleased to announce the addition of five new members to Sage Advisory, boasting decades of experience across the investment, analysis and business development spectrum.

Ryan Charles O’Malley, CFA will take on a Fixed Income Portfolio Strategist role at Sage. Ryan will be an active member of our fixed income portfolio management team, directing our credit strategy and risk analysis efforts. With over 12 years of institutional credit research and global fixed income strategy development experience, Ryan most recently served as Fixed Income Strategist at Payden & Rygel Investment Management in Los Angeles. He received his MBA from the UCLA Anderson School of Management and a BA in Economics from Columbia University.

Komson Silapachai, CFA will take on a Senior Investment Analyst role at Sage. Komson will be an active member of our Portfolio Strategy and Asset Allocation Research team, expanding our investment research and portfolio strategy capabilities. Komson brings over eight years of institutional investment research and portfolio risk management experience, most recently serving as an Investment Manager within the Asset Allocation Group for the Teacher Retirement System of Texas. It is noteworthy that Komson was recognized by Chief Investment Officer Magazine in their coveted “Forty Under Forty” list for 2015. Komson received his BBA in Finance from Texas A&M University.

Edward Ahn has joined Sage as an Investment Analyst, and will be an active member of our Quantitative Solutions investment management and research team, working to expand our investment research and portfolio management capabilities. Edward brings over three years of retirement benefit plan accounting and actuarial valuation reporting experience, most recently serving as Actuarial Associate in benefits consulting with Fidelity Investments in Dallas. Edward is currently completing his ASA designation requirements with the Society of Actuaries. He received a BS in Mathematics with a focus on Actuarial Science from the University of Texas in Austin.

Mark J. Welp has joined our firm as a Senior Portfolio and Operations Analyst, involved with the daily supervision of the firm’s trade allocation, processing and portfolio reporting. Mark brings more than a decade of experience in various trade clearing and operations roles within the financial services industry. Prior to joining Sage, he was a Senior Investment Operations Analyst with the Teacher Retirement System of Texas. Mark received a BA in Business Administration from the University of North Dakota.

Michael R. Navone has joined our firm to be a Regional Marketing and Sales Development Director. Based out of San Francisco, Michael will be responsible for expanding our business presence and relationships with Financial Advisors throughout the Pacific Northwest. Prior to joining Sage, Michael worked in business development roles for WHV Investments and previously at Wells Fargo Advisors. Michael received his BA in Communications from the University of Arizona.

We are pleased to announce these vital additions to the firm who will allow us to continue providing the expertise and superior level of independent investment advice that you have become accustomed to.

Please visit us at www.sageadvisory.com to learn more about our professional staff and award-winning investment services.

Sincerely,

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Robert G. Smith, III
President & CIO

Sage Welcomes Mr. Jeffrey L. Sims

August 30, 2013

Dear Clients and Friends,

We are pleased to announce the appointment of Mr. Jeffrey L. Sims as Executive Vice President and Director of Insurance Investment Management Services at Sage Advisory Services Ltd. Co. In his new role, Jeff will be responsible for leading our insurance-related business development activities at Sage. Jeff brings over 27 years of experience in finance and investments, with particular emphasis on the insurance industry.

Prior to joining Sage, Jeff served as President and Senior Managing Director of Madison Scottsdale, L.C., an investment management firm based solely on the insurance industry. Additionally he previously held several executive financial officer positions, including Chief Investment Officer with American Founders Life Insurance Company and National American Life Insurance Company of California. He began his career with Ernst & Young and currently holds both the C.P.A and C.L.U. designations. Jeff received his BBA in Business Administration and Accounting from The University of Texas.

As always, we encourage you to contact us or visit our website (www.sageadvisory.com) to learn more about our professional staff and their efforts to provide a superior investment management service.

Sincerely,

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Robert G. Smith, III
President & CIO

Sage Welcomes Mr. John R. Slais

June 28, 2013

Dear Clients and Friends,

We are pleased to announce the appointment of Mr. John R. Slais as Chief Financial & Chief Compliance Officer of Sage Advisory Services Ltd. Co.

Since January 2011 John has served as Vice President of Finance and Compliance. He has been a key member of our corporate financial management team and brings over 25 years of financial administration experience as a former CPA with Ernst & Young and as a General Securities Principal and Financial & Operations Principal with FINRA member firms.

Prior to joining Sage, John served as CFO of Capitol Securities Group in Austin, Texas, where he initiated and structured their merger with Morgan Keegan. Additionally, he was previously employed as director and treasurer with seven financial service organizations, served as a NASD/FINRA arbitrator, director and treasurer for Travis County Municipal Utility District #5, and several civic boards. John received his B.S. in Business Administration and Accounting from Harding University.

John will lead our financial reporting and compliance management efforts and fully assume those responsibilities from Richard B. Williams who left the firm earlier this month. As always we encourage you to contact us or visit our website (www.sageadvisory.com) to learn more about our professional staff and their efforts to provide a superior investment management service.

Sincerely,

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Robert G. Smith, III
President & CIO

In Rep-as-PM, Managers Flip the Due Diligence Tables

May 7th, 2013 (Gatekeeper IQ) — When it comes to rep-as-portfolio manager programs, distributors aren‟t the only ones doing the screening.

Such platforms, where advisors have full discretion and, typically, broad latitude in choice of products, are the fastest-growing segment of the fee-based universe. Yet managers say it sometimes pays to be picky about which distributors they target with their products.

[“Due diligence goes both ways,” says Robert Smith, president and chief investment officer at Sage Advisory Services, an Austin, Texas-based firm that specializes in exchange-traded fund-based strategies with $10.8 billion in assets. “You have to be careful of your partners.”] (1)

Assessing each relationship includes several important factors, including how advisors determine and set their fees, the support they receive in developing asset allocation, and whether the home office helps protect the ideas managers deliver in the models distributed to rep-as-PM advisors, managers and distributors say.

Attention to such issues gets increasingly important as such programs continue to grow. During 2012, assets in rep-as-PM programs ballooned by 34.9% to $544.5 billion, according to information from the Money Management Institute and Dover Financial.

“Rep-as-PM is here to stay,” says John Moninger, director of retail sales at Eaton Vance, who, before joining the Boston-based firm last October, served as executive VP of advisory and brokerage consulting at LPL Financial. “We [asset managers] can play an increasingly important role by making sure we are an active partner,” he says.

Capacity is one important part of any strategy both managers and advisors must understand, says Brian Hansen, president and chief operating officer at Confluence Investment Management. The St. Louis- based manager has $1.27 billion in assets under management and another $313 million under advisement, participates in wrap programs at Stifel and Baird, and has strategies available through Schwab, RBC, TD Ameritrade, UBS and Wells Fargo, according to regulatory disclosures.

Being able and willing to “turn off” access to strategies requires cooperation from the portfolio manager, who is focused on performance, and the sales team, focused on building the business to scale. Communication with the advisor long before the product gets close to closing is also important, says Hansen.

Another concern is that the platforms to which Confluence delivers its models protect the intellectual capital behind them.

“With rep-as-PM, you do not really know if [the end advisor is] looking to use you as a portfolio manager or looking to mine you for ideas to take back to their clients,” said Hansen during a panel presentation at the MMI annual meeting last month.

Advisors are under far more pressure to improve their margins today than they were when the bull market raged, he said. “There was not as much focus on every last nickel.”

Now, advisors look for ways to keep a bigger chunk of the overall program management fee charged to clients. One way to do that is to open small accounts with a strategist and then shadow that strategist‟s allocation more broadly across their client in their other portfolios, effectively skirting the third-party management fee.

A telltale sign of such behavior may be an advisor who opens a separate account with a few hundred thousand dollars but then neither adds assets nor liquidates the fund.

To help guard against such risks, Confluence is considering research-only models, in which the manager provides allocation recommendations but the advisor chooses the underlying holdings, Hansen said.

At Placemark, a turnkey platform and overlay management provider, advisors sign contracts that stipulate stealing manager ideas is a violation, says Erik Preus, executive VP for enterprise sales at the firm.

FolioDynamix, meanwhile, allows managers who so choose to have a say in which of the shops the turnkey provider supports that can offer the managers’ product to its advisors. Advisors who request models must first have money earmarked to fund them. If those dollars don‟t materialize relatively soon after the advisor gets access, FolioDynamix shuts off the information pipeline. The intermediary platform also reserves the right to audit any broker-dealer partner‟s records to weed out advisors who might not be playing by the rules. Advisors caught playing dirty risk losing access altogether, says FolioDynamix chief investment officer Shari Hensrud-Ellingson.

Such behavior is uncommon, say executives at both Placemark and FolioDynamix.

[“When you beam up models, you are taking it on faith that they are being distributed to those who paid for it,” says Sage‟s Smith in a subsequent interview. “You don‟t know how viral it goes.”

Some platforms – such as RBC and Cetera Financial – police advisor behavior to thwart would-be model mimics, he says. Sage also recently entered into a distribution deal with Merrill Lynch, as reported in sister publication FundFire.](2)

Perhaps a more common means of boosting margins for advisors is simply charging clients higher fees. Fees charged by advisors can vary wildly, particularly in the independent broker-dealer market, as reported. While the impact of those fees doesn‟t hit managers‟ bottom lines directly, they present a business risk nonetheless, says Sage‟s Smith.

[“I don‟t want to partner with the guy charging [his clients] 2%,” says Smith. And if they do, it‟s important for manager to understand why – and assess whether – the service to clients merits an above-average fee. “The regulators are watching. They are going to be asking, „Why do you charge so much more than everyone else?‟” says Smith. “I don‟t want to be part of that conversation.”

Pricing consistency is another concern. Some home offices allow advisors latitude not only in how they price their services, but in how they adjust those rates based on the specific client. “If the revenue base is erratic, I can‟t get on board with that mentality,” says Smith. His team works with advisors to consult onnpricing models. “You want to be profitable but consistently profitable,” he says.] (3)

Another concern with rep-as-PM programs is whether the advisors that participate in them truly understand asset allocation strategies. “On the sponsor side, if an advisor has that much flexibility, maybe they don‟t have a philosophy on the markets,” said Ed Foley, a director with Dimensional Fund Advisors, during a panel discussion at the MMI meeting last month.

Advisors‟ flip-flopping investment philosophies can translate into choppy flows for the managers they use, he said. The Austin-based quant specialty firm has long required all advisors, irrespective of the types of accounts they operate within, to undergo training before using their products. “Know who you are and what your skill set is, and you will find the investors you deserve,” said Foley.

Both managers and home offices have a vested interest in ensuring that advisors using rep-as-PM platforms have the fundamentals of asset allocation and portfolio construction down cold, says Eaton Vance‟s Moninger.

“That is a shared responsibility of the sponsor firm running the platform and the asset manager,” he says.

Managers should ensure advisors understand what to expect from their products in certain market conditions and how to approach for long-term needs, like preserving wealth, minimizing the impact of market volatility, managing for taxes or how to address a flat or rising interest rate environment.

Advisors also seek technology or systems that provide historical returns or other analytics that can help advisors build thoughtful portfolios. “It‟s being good educators on top of being good investment managers,” says Moninger.

By Hannah Glover

 

(1) Reference: http://www.gatekeeperiq.com/c/515311/57521/managers_flip_diligence_tables?referrer_module=emailMorningNews&module_order=3&cod e=

(2) Reference: http://www.gatekeeperiq.com/c/515311/57521/managers_flip_diligence_tables?referrer_module=emailMorningNews&module_order=3&cod e=

(3) Reference: http://www.gatekeeperiq.com/c/515311/57521/managers_flip_diligence_tables?referrer_module=emailMorningNews&module_order=3&cod e=

Sage joins iShares Bell Ringing at the New York Stock Exchange

February 5th, 2013 — Sage is pleased to announce that our President & CIO, Robert Smith, was present this morning to participate in the iShares Insurance Bell Ringing at the New York Stock Exchange. To view video of the bell ringing, please visit: https://www.youtube.com/watch?v=PWPl2jIkD50

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Sage Welcomes Mr. Zachary Q. Chavis

June 1, 2012

Dear Clients and Friends,

I am very pleased to announce the appointment of Mr. Zachary Q. Chavis as Vice President for Portfolio Management and Fixed Income Trading at Sage Advisory Services.

Zachary brings to Sage an extensive background in institutional fixed income risk management, credit derivative trading and a comprehensive understanding of financial engineering techniques. He was previously employed with Societe Generale in New York as a Vice President for Credit Trading. During his time with the Company Zachary was responsible for institutional market making and proprietary trading in investment grade, high yield and credit default swap securities.

Prior to his professional experience with Societe Generale, Zachary worked with BNP Paribas in New York as a Vice President for Credit Trading and Risk Management. This opportunity was preceded by his employment with Pratt & Whitney as a Research Engineer and the NASA Langley Research Center as a member of the Mars 2001 Odyssey Mission Team. Zachary brings to Sage an extensive and well developed background in institutional trading, risk management and applied financial engineering.

Zachary is an alumnus of The University of Texas, where he received a B.S. Degree in Mechanical Engineering, George Washington University, where he received a M.S. Degree Aerospace Engineering and Carnegie Mellon University-Tepper School of Business in Pittsburgh where he received his MBA Degree in 2007.

In his new position, Zachary will work within Sage’s portfolio management and trading team focusing primarily on credit risk management and strategy development. He will also work closely with our client service and consultant relationship development professionals to communicate our investment strategies. This new appointment further fortifies Sage’s portfolio management team and introduces a fresh dimension to our risk management efforts. As always, we encourage you to contact us to learn more about our professional staff and their efforts to provide a superior investment management service.

Sincerely,

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Robert G. Smith, III
President & CIO