Full-Contact Finance

Full-Contact Finance

Talk about managing money with Paul Viera, CEO of Atlanta-based EARNEST Partners (No. 2 on the BE ASSET MANAGERS list with $8.2 billion in assets under management), and he’ll talk passionately about the thrill of competition. For Viera, money management is a contact sport — each year starts a new “season” where financial performance becomes a permanent mark on an asset manager’s record. Viera’s fascination with continually improving upon his record is what ultimately gives him an edge.

“Throughout my life, I’ve always put myself in a position to compete, whether it was playing sports or trying to do well at competitive schools or in the employment history that I’ve had,” says Viera, a Harvard Business School graduate who also holds an economics degree from the University of Michigan. His passion to compete led him to create his own trademarked stock assessment process, Return Pattern Recognition, which is a program that quickly narrows down more than 3,000 small-cap stocks to the 150 with the best potential to outperform. The process provides such thorough fundamental analysis that it has helped elevate the performance of his 6-year-old investment management firm to rival some of the best asset managers in the country.

Just look at the record. Using Return Pattern Recognition, equity offerings managed by EARNEST Partners have performed impressively. The firm produced a 45.7% gain for 2003 as sub-adviser for the Harbor Small Cap Value Fund (HASCX), placing it in the top third of all funds in its category, according to Chicago-based mutual fund research firm Morningstar Inc. Another fund Viera sub-advises, the Strategic Partners Moderate Growth Fund (PIMGX), placed in the twelfth percentile in its category, with a 25.5% gain for 2003.

And the firm’s fixed-income offering has had an equally impressive performance recently. The EARNEST Partners Fixed Income Trust (IVFTX), an intermediate bond fund, ranked in the top percentile in its category for 2002, according to Morningstar. As the equity markets were reeling from a third consecutive year of double-digit losses, EARNEST Partners’ fixed-income strategy of analyzing a broad number of securities, identifying pricing inefficiencies, and then acquiring the appropriate quality securities enabled the fund to rack up a 12.6% gain in 2002. In fact, the fixed-income fund has been a safe haven for long-term investors. Over the last three years, the fund produced a healthy 7% return, and over the last five years (which includes the three-year recession), it returned a nifty 6.4% to investors — above-average returns compared to similar fixed-income offerings.

An added benefit for Viera has been that the separate accounts his firm manages for corporations, endowments, universities, and municipalities have produced returns that are as impressive as, or even better than, the mutual funds his firm manages. All this positive performance has boosted EARNEST Partners’ assets under management by a remarkable 68.6%. Viera is hopeful that institutional investors are taking notice of his firm’s performance, which could lead to more opportunities to present his financial management philosophies to a wider range of clients. He’d also like them to take notice