Established in 1964, Alger’s dedication to growth-oriented strategies endures. The firm has fostered a solid lineup of growth managers; some of these have come from external hires rather than Alger’s abundant 27-person analyst team. While the analyst team has produced key figures such as CEO Dan Chung and manager Patrick Kelly, its high level of turnover and short average tenure (five years) likely contribute to the number of external hires and exacerbate succession risk. Furthermore, the firm’s success rides on a few mandates, including Amy Zhang’s Alger Small Cap Focus and Alger Mid Cap Focus along with Kelly’s Alger Spectra and Alger Capital Appreciation. Zhang and Kelly handle about half of the firm’s $21 billion in assets under management.
Most Alger strategies underperformed dramatically in 2021 and 2022 (through November), leading to heavy outflows from the firm's mutual funds and institutional accounts. As a result, the firm's asset base shrank to $21 billion by late 2022 from $46 billion in mid-2021. The firm has successfully operated at these asset levels in the past; however, the ability of managers to stick to their philosophy and bounce back from this market drawdown will be crucial going forward.