Research Methodology

Manager research is ingrained in our DNA.

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Our Investment Process

“The only benchmark that you should care about is the one that indicates whether or not you are on track to accomplish your investment objectives.” – Butler, Philbrick & Gordillo

Step 1

A Beacon Pointe consultant works hand-in-hand with your Finance/Investment Committee to create an investment policy that reflects your organization’s specific situation, encompassing clarity of governance, objectives, and strategies.  The Investment Policy Statement is then individually reviewed and approved by our internal Beacon Pointe Investment Committee as appropriate for the client’s needs and circumstances.

Step 2

With the Investment Policy Statement in place and a full understanding of  your organization’s cash flow and spending needs, risk sensitivity, etc., sophisticated techniques are then employed to determine an optimum asset allocation mix to achieve your objectives.

Step 3

Finding the best investment managers in each asset class requires significant effort and focus.  Our proprietary research and evaluation process relies on a sound philosophy, rigorous due diligence efforts, and state-of-the art analytical tools.  As a Beacon Pointe client, you will have a portfolio of investments drawn from a select group of investment managers on our proprietary Focus List that meet or exceed our strict performance and qualitative criteria.

Step 4

Asset allocation strategies and selection of investment managers are only the initial steps involved with a successful investment plan.  Your Beacon Pointe consulting team will regularly review the circumstances and requirements for maintaining a proper asset allocation in line with stated investment policies and continually monitor investment managers in the portfolio to ensure execution of your long-term goals and objectives.

Research and Evaluation of Investment Managers:

 

Beacon Pointe’s most distinguishing characteristic is our depth and breadth of talent and experience in our industry. This has driven us to design our unique and research-intensive methodology in an open architecture environment. Identifying and researching what we believe to be superior investment managers is our core competence. Our manager recommendations are a crucial component of the value-add that we provide to our clients.

Beacon Pointe’s recommended asset managers invest for stability and growth, yet are flexible enough to take actions that help achieve clients’ goals. They move beyond the constraints of index composition and rigid style characteristics and focus instead on finding what they believe are the best investments for their clients. As a result, they tend to protect capital better than their peers when markets are negative. Often, these managers are not found on brokerage platforms or at huge investment houses.

Our proprietary process relies on a sound philosophy, rigorous due diligence efforts, and state-of-the art analytical tools. It includes the following steps:

Manager Sourcing

Manager Sourcing

Beacon Pointe is actively involved in the industry and is able to unearth proven yet undiscovered investment managers from our industry contacts and referrals, manager databases, and directed outreach.

Quantitative Analysis

Quantitative Analysis

A thorough assessment of manager performance with an emphasis on long-term consistency, risk-adjusted returns, downside protection, and peer group ranks.

Qualitative Analysis

Qualitative Analysis

Meetings with Portfolio Managers, completion of Beacon Pointe’s Investment Manager Questionnaire, interviews with analysts, and an exhaustive review of the firm’s ownership and compensation structure, investment philosophy and trading capabilities.

Portfolio Analysis

Portfolio Analysis

Holdings-based style analysis and historical attribution analysis; in-depth discussions regarding specific portfolio holdings; on-site visit with full access to the firm’s records, valuation models, personnel, and research reports.

Product Evaluation

Product Evaluation

Reference checks, review of manager’s Form ADV, negotiation of management fees and account minimums, and final scoring and research.

Investment Committee Decision

Investment Committee Decision

A careful review at the highest level determines if the manager qualifies for our Focus List or is moved to our ‘Manager Bench’ for later consideration.

Many of our clients are committed to socially responsible and impact or “purposeful” investing, and we work to express these values in their investment policy statements and portfolios. Impact investments are made with the intention to generate measurable social and environmental impact in addition to a financial return. We have extensive experience in this field.

We will work with you to articulate your impact investing goals, creating a strategy that is consistent with your objectives.  Implementing and monitoring that strategy, we will constantly search for new ways to express your values.

When researching responsible investing strategies, we employ the same thorough due diligence process that we use for traditional strategies. Each investment manager candidate must meet Beacon Pointe’s strict quantitative and qualitative criteria in order to be considered by our Investment Committee. In addition, each candidate is asked to complete an additional questionnaire specific to its firm’s responsible investing practice, and we perform an in-depth review of each manager’s:

1

Overall philosophy and approach to responsible investing

2

Firm-wide resources dedicated to the responsible investing effort and related strategies

3

Information sources and analytical tools used in the team’s ESG/SRI research

4

Values-based considerations in portfolio construction, buy and sell disciplines, and risk guidelines

5

Ability to customize client portfolios to meet specific social objectives and restrictions

6

Approach to shareholder activism and proxy voting and level of industry and community involvement

7

Thought leadership in the area of responsible investing and published research on related topics

8

Client references and experience working with the manager