For option #5 you can select for wrap managers, socially responsible, minority owned, AIMR/GIPS compliant, and geographically by state. Click the Wrap manager box if you want to screen for managers with account minimums between $100,000 and $250,000. Keep in mind that you will need to contact the managers to learn which brokerages carry their Wrap programs, fees and accounts minimums. If you are interested in finding managers within specific states, you can use the state pull-down to further narrow your search.

For option #6 you can choose annualized returns for time periods of 1,3, 5,7 and 10 year. You can also rank managers by returns risk or efficiency. We use standard deviation as a measurement of risk. Efficiency is defined as the ratio between the manager’s return and risk.

Now let’s do a ranking of US Equity Multi-cap Value managers ranked by Ten Year annualized returns. (See Illustration #6)

Using our number 1 ranked manager, Private Capital Management, we can learn more about the manager by clicking on “Report”, which is located next to Private Capital’s products name. A pop-up report appears. (See Illustration #8)

Next click on “Chart” which you will find located next to the report link. (See Illustration #9)

To compare a manager’s performance against a benchmark, scroll to the top of the chart page and next to Dow Jones indexes click on the down arrow next to select a product. Clicking on any of these indexes will allow a benchmark index to be added to the manager’s graphs and tables below. In addition, you can add a second index by clicking on the select product under the market indexes. This will give you an additional benchmark against which to measure performance. When you have finished viewing the graphs, click on the “X” on the upper right hand corner of the pop-up window. This will bring you back to the rankings page.

To see all the manager’s products, click on the manager’s name from the ranking table and all the manager’s products will be shown. The product highlighted in red is the product you just clicked on in the rankings table. (See Illustration #10)

From the search options page, click on rank managers, and from the pull-down click on risk-adjusted. (See Illustration #11)

Let’s do a risk adjusted ranking for all US Equity Multi-Cap managers for ten years. Next we click submit. (See Illustration #12)

The Rankings Summary table is divided into four sections identified as Annualized Return, Annualized Risk, Return/Return and Overall. Each section is further divided into Percentages and Percentiles. On the left side of the table years 1, 3, 5, 7 & 10 year annualized periods are further identified.

In Illustration 24, the red arrows show the annualized returns, risk (standard deviation, and return/risk. These are “absolute” returns which we most often use to access managers’ performance but do not help us in identifying how each manager is doing relative to other managers or their style groups.

The green arrows show the relative percentiles for annualized returns, risk (standard deviation, and return/risk. The relative percentiles are a valuable tool to access how managers’ are doing relative to each other, their style groups and style indexes.

These percentiles are calculated by using performance measures of each manager relative to all managers in the MMR universe. For example, for 10 years, our manager’s 24.70% return put them in the 78.57 percentile of all managers in the MMR universe. With a 78.57 percentile, this manager had a 10 year annualized return which was better than all but 24.43% of MMR managers (100-78.57=24.43).

For risk (standard deviation) we should favor low risk managers. We invert the percentiles so that the lower the manager’s risk the higher their percentile. In our example, the 10 year risk was 19.11% which put this manager in the 64.75 percentile when compared to all MMR managers. This means that 64.75% of the managers in the MMR universe have a risk factor higher than this manager.

For Return/Risk we are again looking for a higher ratio or higher percentile. In our example our manager has a 73.02 percentile which means that his is return to risk ratio is better than all but 26.98 of our mangers (100-73.02=26.98).

The Overall percentile, shown in the last column to the right, is the average of the three percentiles, Return, Risk and Return/Risk. Our example shows us that this manager has a 72.11% overall percentile average for 10 years.

In evaluating this table we should be looking for an overall higher than average percentile for all time periods. We are also looking for consistency in these numbers over time. For example, if we look at the percentile return numbers for 1,3,5,7, & 10 years, we see that the manager is generally between a range of 59 and 78 percentile. However, in the risk category the numbers place the manager between 46 and 64 percentile with the lower percentile numbers coming in more recent time periods of 1 & 3 years. This indicates that the manager may have shifted his investment strategy and is now taking on higher levels of risk with his portfolios.

It is always helpful to compare the mangers relative performance to either their index style or other mangers with similar investment styles. For example, a large cap value manager is best compared to other large cap value managers or to a similar index like the Dow Jones large cap value index.

The Rankings Summary table can serve as a valuable tool in identifying above average manager performance. It can also help in judging the manager performance consistency over time.