Content provided by Rusty Vanneman, CFA, CMT, Chief Investment Officer

I’m often asked by investors, now that I have 30 years in the industry under my belt, how I have changed as an investment professional over the years.

It’s a good question and, frankly, it should be asked of every investment manager and advisor. The answers will likely be nuanced and perhaps not as easy to discern as trying to find the difference in the following photos:


Could you spot the difference?

So, how have I changed as an investment professional? At the core, I think I have always been a value-oriented investor with a contrarian sensibility. That has never changed. My personal attributes and my mission haven’t changed either.

While my analytical and portfolio management skills have surely been refined by years of experience, including multiple bull and bear markets (both in absolute and relative terms), I don’t think my peers, associates, or clients from the early years in my career would be surprised at what they see in me now.

What has changed the most is I have come to fully realize that being a good investment professional isn’t just about a number or portfolio return. The true goal is creating success for investors through my overall portfolio management. That means building attractive portfolios and providing the necessary communication and service to support the investors’ experience.

Let’s break that last sentence down.

I believe an attractive portfolio behaves as an investor expects. It doesn’t surprise or disappoint investors. The portfolio behavior is key. Does it behave as expected when prices move higher? Does it behave as expected when prices move lower? Surprising behavior, even when the markets go up, doesn’t necessarily provide comfort.

Creating an attractive portfolio goes beyond the selection of stocks and bonds. It also involves communication. Some recent feedback from advisors was that our investment team’s communication at CLS was commonsensical and transparent. Bam. That’s exactly what we strive for.

I believe successful communication should:

  1. Explain how markets work and educate investors. I have found my presentations on market history are way more useful to investors than the reviews of economic charts that I used to emphasize early in my career.
  2. Manage expectations in the context of the current market environment. For example, if valuations are high, such as they are now, expected returns should be lowered. Investors often get too high or too low. The key is to educate and manage expectations and bring investors back to center and back into balance.
  3. Maintain regular and reliable communications — and provide access at all times.

Early in my career, when I worked at Fidelity Management and Research in Boston, I had an opportunity to ask the head of the department, Gary Burkhead, who had such notables as Peter Lynch, Jeff Vinik, Joel Tillinghast, Will Danoff, and many other great investment minds and managers work for him, what made a great manager. He said it wasn’t just the brilliance of managing a portfolio, it was also the ability to communicate and keep investors confident and comfortable in their capabilities through all market environments. I always remembered those words. But, to be honest, I didn’t completely embrace them until years later when I learned that success wasn’t determined in my portfolio’s returns, but in my clients’.