Our Investment Research Process consists of seven steps and is guided by three main principles:
Our research of new investments begins with a set of quantitative screens using mutual fund, ETF and separate account databases. We then apply qualitative screens, utilizing existing investment relationships and industry contacts as well as our continuous education on the investment universe.
Historical performance is an important information source that helps us identify managers who may warrant further qualitative analysis. Key measures that we evaluate are style consistency and risk-adjusted performance metrics including: alpha, Sharpe ratio, information ratio and expense levels relative to peers.
Our Due Diligence Questionnaire is a useful tool to help us better understand an investment team and its investment process. It is comprised of detailed questions covering investment philosophy, portfolio management style, compensation structure, expense levels, team structure and risk policies. We also review past investment commentaries, historical shareholder reports and SEC filings.
In this step of the process, we assess the portfolio management team including their skill, discipline and other qualitative characteristics. We speak with a combination of portfolio managers, analysts and client specialists to learn their contributions to the strategy and determine the quality and depth of the team.
Collaboration within our research team is integral to our process. It ensures that we uphold our strict standards during our due diligence process and allows us to identify any analytical errors, biases or shortcuts in our research. We have healthy debates and scrutinize our findings, then exercise a democratic process to determine our decisions.
Based on team meetings this final follow-up is done to unveil any unanswered questions. If necessary, we conduct further background checks of third-party relationships.
Lastly, our process includes continual monitoring of the manager once an investment is made for inclusion into our portfolios. We closely follow and review strategy performance, portfolio characteristics, investment team changes and firm-related issues.
