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Active
Never Rests.

In investing, strategies can be manufactured — or they can be crafted.

At William Blair, clients turn to us for an enhanced approach to active management. This approach helps us seek to deliver consistent, long-term alpha by actively taking compensated risks and avoiding uncompensated risks.

Active management is more than just an investment approach at William Blair. While stability has been at the core of our existence since our founding in 1935, our active ownership culture promotes a dynamic environment in which our business and investment processes continuously evolve with a constant focus: Align with your interests and help you achieve successful investment outcomes.

It is possible—while staying true to our roots as fundamental, bottom-up stock-pickers—to add more science to the art of investing.

Ken McAtamney, Partner Portfolio Manager, Global Equity Team
  • We evolve with you.

    STABILITY AND EVOLUTION

    Building on the foundation of our firm’s stability, we are continuously evolving the business and our investment processes to meet your needs while remaining true to our core investment tenets.

  • Our partnerships endure.

    UNIQUE ENVIRONMENT

    We have created an environment in which investment professionals (analysts and portfolio managers) can thrive practicing the profession of investment management and professionals are committed to seek long-term success for our clients.

  • Our interests align with yours.

    UNCOMPROMISING INTEGRITY

    We make investment decisions based exclusively on what’s best for you and earn your trust through transparency and an unwavering commitment to active investing and what’s in your best interests.

  • Access high-conviction investors.

    UNIQUE VOICES; SHARED VALUES

    Our autonomous investment teams have the freedom and flexibility to deliver high-conviction active management while benefiting from a culture that promotes a shared foundation of principles and values.

  • We have a passion for investing.

    CURIOSITY AND CONVICTION

    A culture of deep curiosity and conviction promotes ongoing investment process improvements while each team stays true to its investment philosophy.

  • Avoid surprises in your portfolios.

    DISCIPLINED, PROVEN PROCESS

    Our consistent, rigorous, and repeatable process allows strategies to perform as clients expect.

  • Our interests align with yours.

    100% ACTIVE EMPLOYEE-OWNED

    Our broad-based ownership structure aligns with our clients’ long-term interests—we have no outside influences or constantly changing short-term priorities.

  • Our investment teams maintain continuity.

    DYNAMIC AND STABLE

    Our dynamic ownership helps retain top talent, ensuring our best investment minds are working on your behalf.

  • We build long-term relationships.

    CLIENT-FOCUSED

    Our broad-based, active ownership means we build client relationships that last year after year rather than quarter to quarter.

Gain Insights.

Discover insights on macro market events, the economy, and active investing strategies. Receive our updates in your inbox with headlines like:
- Adding Science to the Art of Active Management
- What’s Artificially Driving Volatility Down?

Global Equity Team:
Integrated Fundamental
and Systematic Process

We believe our systematic tools enhance our in-depth fundamental analysis, helping us improve investment outcomes for our portfolios and clients.

WHAT WE BELIEVE

We believe that quantitative tools objectively inform our rigorous fundamental research. Our corporate performance focus within a global strategy framework:

  • Pursues sustainable value creation at the corporate level, enhanced by a broader strategic viewpoint of macroeconomic and geopolitical dynamics
  • Integrates ESG factors as part of our fundamental analysis

We believe that companies with high-quality and sustainable growth characteristics may:

  • Perform well in up markets
  • Protect in down markets
  • Produce attractive, risk-adjusted returns

WHY THIS MATTERS

We believe our systematic tools enhance our in-depth fundamental analysis, helping us improve investment outcomes for our portfolios and clients. Our proprietary quantitative research models help:

  • Prioritize opportunities
  • Identify potential risks
  • Inform portfolio strategy through the aggregation of data by geography, sector/industry and market cap

GLOBAL EARNINGS TREND AND VALUATION SCORE BY REGION (AS OF 6/30/17)

Select or hover over the quadrants to preview trends:

45 50 55 60 65
UNITED STATES
UK
JAPAN
EUROPE EX. UK
CANADA
ASIA EX. JAPAN
LATIN AMERICA
EMEA
EM Asia
EARNINGS TREND
70 65 60 55 50 45 40 35 30
VALUATION
Source: William Blair quantitative models. Scores based on William Blair Investment Management's proprietary research management and investment-process platform. 1 is best, 100 is worst. Based on the MSCI AC World IMI.**

Dynamic Allocation Strategies Team: Geopolitical Analysis

Geopolitical developments can impact market and currency prices—and client portfolios—over the short- and medium-term. We use a game theoretical framework to navigate these macro events.

WHAT WE BELIEVE

Long-term fundamental analysis is the team’s foundation, but fundamental analysis alone is not sufficient for global macro investors.

Geopolitical developments can impact market and currency prices—and client portfolios—over the short- and medium term. Our team uses a game theoretical framework to navigate macro events, which helps us:

  • Assess strategic interactions of multiple players
  • Better understand negotiations and related investment implications
  • Dynamically increase or decrease portfolio exposures

WHY THIS MATTERS

Geopolitical situations, such as the U.S. election and Brexit, influence market and currency prices—as well as investment portfolios. One of our current geopolitical game theaters is staged in the South China Sea, where a long-standing, multi-player negotiation about both trade and security involves Asian countries as well as the United States.

From a trade perspective, two prominent trade deals, the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP), feature several Asian countries but now exclude the United States. From a security perspective, we currently see competing claims on islands in the East and South China Seas, which create macro risks as these seas represent security posts, shipping lanes, and claims on untapped natural resources. All the while, North Korea maintains an aggressive stance (as reflected in recent episodes of launching missiles and detaining foreign citizens) that will likely prompt responses from the U.S. and its allies.

U.S. Growth Equity Team:
Growth Investing With a Valuation Discipline

We believe many growth investors underappreciate the role of valuation in finding stocks that will outperform the market.

WHAT WE BELIEVE

We believe investing in quality growth companies whose stocks are mispriced enables us to outperform over time. Our intense focus on finding companies with strong management teams, sustainable business models, and attractive financials helps us identify durable business franchises that can sustain growth for a long period of time.

Because we believe the price you pay for an asset matters, we seek to purchase quality growth companies when they are attractively valued:

  • No one metric is sufficient for valuing all companies
  • By using multiple valuation methods we can build a more complete picture of what a company is worth

WHY THIS MATTERS

It is a common misconception that an investor can outperform the market by simply investing in the stocks of growing companies. We believe many growth investors underappreciate the role of valuation in finding stocks that will outperform the market.

By applying our bottom-up, fundamental analysis to identify quality growth companies and then utilizing various valuation methods, such as discounted cash flow analysis, absolute and relative multiple analysis, and other non-traditional valuation analyses, we are able to build a more holistic picture of what a company is worth. We believe this focus on investing in growth companies that are attractively priced allows us to deliver compelling returns for client portfolios over time.

U.S. Value Equity Team:
Capital Stewardship Focus

We believe that management teams that are good stewards of capital and employ it efficiently generally will grow their business over time and create shareholder value.

WHAT WE BELIEVE

We believe successful companies possess superior capital stewardship and management teams focused on shareholder value—a solid balance sheet and cash flows may provide downside protection. As a result, we balance valuation and fundamentals  with a strong emphasis on cash flows and return on invested capital (ROIC).

Proprietary company-specific modeling and valuation work:

  • Helps gauge management’s historical record of capital stewardship
  • Highlights future opportunities for a company to create shareholder value

And our sector neutral approach allows us to focus on investing in the best stocks within each sector.

WHY THIS MATTERS

Small-cap companies typically have an insatiable appetite to get bigger. There are a number of ways these companies can grow and many of these options are not shareholder friendly. The most straightforward example is a management team that makes a series of acquisitions and overpays for the acquired companies. In the end, the company is now larger, but was this the most efficient way for the company to employ its capital? Would the company have been better off returning this capital to shareholders or paying down debt?

We strive to invest in companies that are focused on growing the right way and are generally growing their free cash flow and return on invested capital. We believe management teams that are good stewards of capital and employ it efficiently generally will grow their business over time and create shareholder value. If management struggles to find a good use for the company’s excess capital, they are generally better off being disciplined until the right opportunity comes around or returning the excess capital to shareholders so they can employ it as they see fit.

Fixed Income Team:
Nimble Approach Seeks Compelling Opportunities

Our nimble approach emphasizes security selection among the 20% of the fixed-income market, which we believe offers compelling value opportunities.

WHAT WE BELIEVE

80% of the Bloomberg Barclays U.S. Aggregate Index is comprised of securities with little to no risk spread: U.S. Treasury notes and bonds, agency mortgage-backed securities purchased by the Federal Reserve, and credit instruments with risk spreads of fewer than 100 basis points.

Our nimble approach emphasizes security selection among the other 20% of the market, which we believe offers compelling value by:

  • Providing the opportunity to consistently add meaningful value
  • De-emphasizing tactics that rely on unpredictable sources of return, such as interest-rate timing and illiquidity risk

WHY THIS MATTERS

More than 80% of the Bloomberg Barclays U.S. Aggregate Index has Treasury-like characteristics. Click the diagram below to see where we believe fixed-income opportunities exist.

20% Of Market Offers Compelling Value Characteristics

Select or hover over the chart to preview opportunities:

BLOOMBERG BARCLAYS U.S. AGGREGATE INDEX (AS OF 3/31/17)

* Credit primarily includes corporate bonds, as well as agency and quasi-sovereign debt, commercial mortgage-backed securities, and asset-backed securities.
Source: Bloomberg Barclays, BlackRock Solutions, William Blair.

An active fixed-income manager can employ three strategies in seeking to outperform a benchmark:

  • Interest-rate-timing strategies
  • Earning a higher yield by accepting illiquidity risk
  • Earning a higher yield by accepting borrower risk

Two of these strategies—interest-rate timing and illiquidity risk—are inconsistent with the objectives of “core” fixed-income investing because they are inherently unpredictable.

However, an actively managed strategy that earns a higher yield by accepting borrower risk while controlling the portfolio’s interest-rate and liquidity risk may consistently outperform while maintaining the benefits of core fixed income.

Factors that determine the yield premium that can be earned in a fixed-income security include fundamental credit risk (such as default risk for a corporate bond or prepayment risk for a mortgage-backed security) as well as supply and demand forces.

INSTITUTIONAL BIASES CREATE VALUE OPPORTUNITIES

We believe institutional biases arise from the forces driving supply and demand and result in compelling value opportunities. Some of those institutional biases include:

  • The presence of “mega managers” with large asset bases and teams
  • Credit-rating rigidities, which force purchases and sales
  • A tendency to avoid bonds with embedded options, as the analysis required is more complex
  • A focus on a bond’s price and not its expected return

We believe value opportunities resulting from these biases can be found in about 20% of the fixed-income market, including:

  • Agency mortgage-backed security coupon segments that have not been purchased by the Federal Reserve in their large-scale asset purchase programs
  • Corporate bonds with risk spreads greater than 100 basis points
  • U.S. Treasury Inflation-Protected Securities (TIPS)

But compelling value does not come without risk—and we believe the borrower risks inherent in these market segments can be managed through our time-tested security-selection processes.

  • With agency mortgage-backed securities, we focus on pools of smaller-balance loans, which we believe can mitigate prepayment and extension risk because such borrowers of such loans make more consistent payments regardless of the prevailing interest-rate environment
  • In the corporate sector, we seek bonds of companies that create sustainable and consistent value—and we leverage quantitative and fundamental research resources that reside within William Blair Investment Management

Global Equity Team:
Integrated Fundamental
and Systematic Process

We believe our systematic tools enhance our in-depth fundamental analysis, helping us improve investment outcomes for our portfolios and clients.

WHAT WE BELIEVE

We believe that quantitative tools objectively inform our rigorous fundamental research. Our corporate performance focus within a global strategy framework:

  • Pursues sustainable value creation at the corporate level, enhanced by a broader strategic viewpoint of macroeconomic and geopolitical dynamics
  • Integrates ESG factors as part of our fundamental analysis

We believe that companies with high-quality and sustainable growth characteristics may:

  • Perform well in up markets
  • Protect in down markets
  • Produce attractive, risk-adjusted returns

WHY THIS MATTERS

We believe our systematic tools enhance our in-depth fundamental analysis, helping us improve investment outcomes for our portfolios and clients. Our proprietary quantitative research models help:

  • Prioritize opportunities
  • Identify potential risks
  • Inform portfolio strategy through the aggregation of data by geography, sector/industry and market cap

Dynamic Allocation Strategies Team: Geopolitical Analysis

Geopolitical developments can impact market and currency prices—and client portfolios—over the short- and medium-term. We use a game theoretical framework to navigate these macro events.

WHAT WE BELIEVE

Long-term fundamental analysis is the team’s foundation, but fundamental analysis alone is not sufficient for global macro investors.

Geopolitical developments can impact market and currency prices—and client portfolios—over the short- and medium term. Our team uses a game theoretical framework to navigate macro events, which helps us:

  • Assess strategic interactions of multiple players
  • Better understand negotiations and related investment implications
  • Dynamically increase or decrease portfolio exposures

WHY THIS MATTERS

Geopolitical situations, such as the U.S. election and Brexit, influence market and currency prices—as well as investment portfolios. One of our current geopolitical game theaters is staged in the South China Sea, where a long-standing, multi-player negotiation about both trade and security involves Asian countries as well as the United States.

From a trade perspective, two prominent trade deals, the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP), feature several Asian countries but now exclude the United States. From a security perspective, we currently see competing claims on islands in the East and South China Seas, which create macro risks as these seas represent security posts, shipping lanes, and claims on untapped natural resources. All the while, North Korea maintains an aggressive stance (as reflected in recent episodes of launching missiles and detaining foreign citizens) that will likely prompt responses from the U.S. and its allies.

U.S. Growth Equity Team:
Growth Investing With a Valuation Discipline

We believe many growth investors underappreciate the role of valuation in finding stocks that will outperform the market.

WHAT WE BELIEVE

We believe investing in quality growth companies whose stocks are mispriced enables us to outperform over time. Our intense focus on finding companies with strong management teams, sustainable business models, and attractive financials helps us identify durable business franchises that can sustain growth for a long period of time.

Because we believe the price you pay for an asset matters, we seek to purchase quality growth companies when they are attractively valued:

  • No one metric is sufficient for valuing all companies
  • By using multiple valuation methods we can build a more complete picture of what a company is worth

WHY THIS MATTERS

It is a common misconception that an investor can outperform the market by simply investing in the stocks of growing companies. We believe many growth investors underappreciate the role of valuation in finding stocks that will outperform the market.

By applying our bottom-up, fundamental analysis to identify quality growth companies and then utilizing various valuation methods, such as discounted cash flow analysis, absolute and relative multiple analysis, and other non-traditional valuation analyses, we are able to build a more holistic picture of what a company is worth. We believe this focus on investing in growth companies that are attractively priced allows us to deliver compelling returns for client portfolios over time.

U.S. Value Equity Team:
Capital Stewardship Focus

We believe that management teams that are good stewards of capital and employ it efficiently generally will grow their business over time and create shareholder value.

WHAT WE BELIEVE

We believe successful companies possess superior capital stewardship and management teams focused on shareholder value—a solid balance sheet and cash flows may provide downside protection. As a result, we balance valuation and fundamentals  with a strong emphasis on cash flows and return on invested capital (ROIC).

Proprietary company-specific modeling and valuation work:

  • Helps gauge management’s historical record of capital stewardship
  • Highlights future opportunities for a company to create shareholder value

And our sector neutral approach allows us to focus on investing in the best stocks within each sector.

WHY THIS MATTERS

Small-cap companies typically have an insatiable appetite to get bigger. There are a number of ways these companies can grow and many of these options are not shareholder friendly. The most straightforward example is a management team that makes a series of acquisitions and overpays for the acquired companies. In the end, the company is now larger, but was this the most efficient way for the company to employ its capital? Would the company have been better off returning this capital to shareholders or paying down debt?

We strive to invest in companies that are focused on growing the right way and are generally growing their free cash flow and return on invested capital. We believe management teams that are good stewards of capital and employ it efficiently generally will grow their business over time and create shareholder value. If management struggles to find a good use for the company’s excess capital, they are generally better off being disciplined until the right opportunity comes around or returning the excess capital to shareholders so they can employ it as they see fit.

Fixed Income Team:
Nimble Approach Seeks Compelling Opportunities

Our nimble approach emphasizes security selection among the 20% of the fixed-income market, which we believe offers compelling value opportunities.

WHAT WE BELIEVE

80% of the Bloomberg Barclays U.S. Aggregate Index is comprised of securities with little to no risk spread: U.S. Treasury notes and bonds, agency mortgage-backed securities purchased by the Federal Reserve, and credit instruments with risk spreads of fewer than 100 basis points.

Our nimble approach emphasizes security selection among the other 20% of the market, which we believe offers compelling value by:

  • Providing the opportunity to consistently add meaningful value
  • De-emphasizing tactics that rely on unpredictable sources of return, such as interest-rate timing and illiquidity risk

WHY THIS MATTERS

More than 80% of the Bloomberg Barclays U.S. Aggregate Index has Treasury-like characteristics. Click the diagram below to see where we believe fixed-income opportunities exist.

20% Of Market Offers Compelling Value Characteristics

Select or hover over the chart to preview opportunities:

BLOOMBERG BARCLAYS U.S. AGGREGATE INDEX (AS OF 3/31/17)

* Credit primarily includes corporate bonds, as well as agency and quasi-sovereign debt, commercial mortgage-backed securities, and asset-backed securities.
Source: Bloomberg Barclays, BlackRock Solutions, William Blair.

20% Of Market Offers Compelling Value Characteristics

BLOOMBERG BARCLAYS U.S. AGGREGATE INDEX (AS OF 3/31/17)

piechart_over
* Credit primarily includes corporate bonds, as well as agency and quasi-sovereign debt, commercial mortgage-backed securities, and asset-backed securities.
Source: Bloomberg Barclays, BlackRock Solutions, William Blair.

An active fixed-income manager can employ three strategies in seeking to outperform a benchmark:

  • Interest-rate-timing strategies
  • Earning a higher yield by accepting illiquidity risk
  • Earning a higher yield by accepting borrower risk

Two of these strategies—interest-rate timing and illiquidity risk—are inconsistent with the objectives of “core” fixed-income investing because they are inherently unpredictable.

However, an actively managed strategy that earns a higher yield by accepting borrower risk while controlling the portfolio’s interest-rate and liquidity risk may consistently outperform while maintaining the benefits of core fixed income.

Factors that determine the yield premium that can be earned in a fixed-income security include fundamental credit risk (such as default risk for a corporate bond or prepayment risk for a mortgage-backed security) as well as supply and demand forces.

INSTITUTIONAL BIASES CREATE VALUE OPPORTUNITIES

We believe institutional biases arise from the forces driving supply and demand and result in compelling value opportunities. Some of those institutional biases include:

  • The presence of “mega managers” with large asset bases and teams
  • Credit-rating rigidities, which force purchases and sales
  • A tendency to avoid bonds with embedded options, as the analysis required is more complex
  • A focus on a bond’s price and not its expected return

We believe value opportunities resulting from these biases can be found in about 20% of the fixed-income market, including:

  • Agency mortgage-backed security coupon segments that have not been purchased by the Federal Reserve in their large-scale asset purchase programs
  • Corporate bonds with risk spreads greater than 100 basis points
  • U.S. Treasury Inflation-Protected Securities (TIPS)

But compelling value does not come without risk—and we believe the borrower risks inherent in these market segments can be managed through our time-tested security-selection processes.

  • With agency mortgage-backed securities, we focus on pools of smaller-balance loans, which we believe can mitigate prepayment and extension risk because such borrowers of such loans make more consistent payments regardless of the prevailing interest-rate environment
  • In the corporate sector, we seek bonds of companies that create sustainable and consistent value—and we leverage quantitative and fundamental research resources that reside within William Blair Investment Management

High Active
Share and Manager
Conviction

We have deep conviction in our enhanced active management approach, as exhibited by high active share across all our William Blair equity strategies.

What is active share?

Active share is a measure of the percentage of stock holdings in a manager’s portfolio that differs from the benchmark index. It is a key indicator of an investment manager’s:

  • Conviction in the team’s approach
  • Willingness to be different from the benchmark (not hug the benchmark)
  • Opportunity to outperform the benchmark

Many growth managers fall in love with a growth story and valuation becomes an afterthought. As growth managers with a strong valuation discipline, this is an exploitable inefficiency for us.

Dan Crowe, CFA, Partner Portfolio Manager, U.S. Growth Equity Team
barchart

ACTIVE SHARE: WILLIAM BLAIR EQUITY STRATEGIES (AS OF 3/31/17)

WILLIAM BLAIR STRATEGIES (SELECT TO PREVIEW)
Source: William Blair. The data shown above is based on the strategy’s representative portfolio.

Our Values: Empowered
By a Strong Cultural Foundation


Gain Insights.

Discover insights on macro market events, the economy, and active investing strategies. Receive our updates in your inbox with headlines like:
- Adding Science to the Art of Active Management
- What’s Artificially Driving Volatility Down?

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Gain Insights.

Discover insights on macro market events, the economy, and active investing strategies. Receive our updates in your inbox with headlines like:
- Adding Science to the Art of Active Management
- What’s Artificially Driving Volatility Down?