Jon StojanWith the increase of new technology and shifting client expectations, asset management is poised to transform. As more players enter the space, especially passive offerings driven by AI, firms are embracing innovative strategies. Building a competitive edge will take time, but boutique asset firm Kerusso Capital Management argues that leveraging a more holistic methodology may help.
A recent report suggests the inevitable consolidation of the asset management industry. Robo advisors and the influx of new players are threatening the dominance certain firms have on the market. Many are scaling with the hope of outperforming the competition. However, traditional investing strategies may not be enough to retain today’s consumers. With the re-emergence of conscious capitalism, an ideology that business should positively serve all people and things, investment managers need to consider fresh perspectives. Clients want to build more diverse, socially impactful portfolios that perform competitively. Yet, they want firms that subscribe to human-centric principles of business.
Randell “Randy” Cain, Jr., CFA, Kerusso Capital Management Founder and investment expert, notes that asset management should be about more than buying, selling, and churning a profit. Throughout his 31 years in the industry, Randy has recognized harmful practices at some of the top firms. In many cases, these procedures prohibit the success of company staff, but in some cases, they also interfere with client satisfaction. While large firms are legally required to act in a client’s best interest, each one has a separate culture that influences their decision-making. For Randy, who in addition to being a portfolio manager is also a devout Christian pastor, acting with integrity should be consistent inside and outside the workplace. Meaning that you should be a person of faith at your place of worship, at your place of commerce, and any place in between. At Kerusso Capital Management, the firm is redefining the bounds of value-focused investment principles with a holistic ideology.
Contrary to what faith-based suggests, Kerusso Capital Management isn’t a firm that places religious beliefs over investment due diligence. The firm works with clients of all backgrounds and simply attempts to integrate the team’s most authentic and excellent selves into their work. This means that outperforming the market is often tied to leveraging implicit faith perspectives without being religiously dogmatic. Seeing this as a benefit and not a detriment, Randy asserts that Kerusso Capital Management’s success is grounded in the fundamentals of traditional asset management.
Kerusso deploys a proprietary screening methodology to identify value-creating opportunities at the individual stock level. Next, Kerusso utilizes SWOT (Strengths-Weaknesses-Opportunities-Threats) analysis on the four key building blocks of a business which are strategy, management, operations, and financials. This approach helps Kerusso to have a deep understanding of the underlying business rather than simply the stock. As a result, Kerusso views itself as a firm focused on investing rather than trading, as evidenced by the targeted 20-30% turnover for the portfolio holdings.
In addition, Kerusso is differentiated in its approach to sector allocation by eschewing a top-down process and adhering to the same identification of value-creating opportunities at the sector level. This aspect of the investment process keeps Kerusso positioned for where it believes the market should be expected to generate outperformance. Combined with stock selection, Kerusso’s portfolio embodies downside protection as well as alpha generation.
By understanding sector, industry, and stock dynamics which results in deviation of true worth and market value, Kerusso Capital Management offers benchmark-beating returns through the identification of companies mispriced as stocks based on prevailing market sentiments.
“Kerusso is Latin for ‘proclaim the truth with authority’ and it represents the uniqueness of our firm,” Randy says. “We maximize value-creating opportunities at the stock, sector, and portfolio level which generates one type of alpha. We also focus on generating alpha for the equity owners of Kerusso. And we are intentionally focused on generating alpha by presenting Kerusso as a minority and women-owned firm to open up the possibilities for more minorities and women to enter this industry.”
Randy is committed to bringing these visions to reality by offering his gifts in sacred and secular circles. Since deepening his faith in college and becoming an ordained minister in 2006, Randy has embraced servant leadership. Whether through Kerusso or his personal life, he is always looking to offer value, knowledge, and authenticity to others. This dedication to excellence is palpable in Kerusso’s impressive returns.
Amid the chaos and challenges of an ever-evolving industry, Kerusso Capital Management will continue working to create a more effective and equitable investing environment, for all.