We're excited to share with you our first white paper for 2019! Authored by investment analyst Caryn Sanchez, Investment Manager Selection for Actively-managed Funds is an in-depth look into how Multnomah Group conducts the investment manager due diligence that underlies our actively-managed fund recommendations.
Retirement plan investment menu design depends on two key decisions:
- what asset classes are to be included
- what investment strategies should be used for each asset class
In this paper, we cover how Multnomah Group constructs actively-managed investment menus and how we evaluate investment management teams, philosophy and process, and portfolio construction and risk controls.
Tina and Caryn begin with Multnomah Group's philosophy of investment menu design, which incorporates investment “tiers.” The tiered approach is easy to communicate to participants and can assist them in building the right portfolio for their degree of investment knowledge. The first tier of the investment menu is typically a suite of target date funds (in many cases the plan’s qualified default investment alternative “QDIA”). This tier is designed for participants who want to invest for retirement but prefer to leave the asset allocation decisions to professional investment managers. The second tier provides a small selection of broad asset class investment products, including a stable principal investment option, fixed income, U.S. and international equities. Frequently, the investment products within this tier are broad-based index funds because they give participants the basic building blocks for a diversified portfolio at a low investment expense. The third tier is an extended set of options that provide participants choices among narrower asset class and investment style categories. Usually, this tier is populated with a selection of actively-managed and style-pure mutual funds. It is the focus of this paper.[i]
To download the full paper, please click the button below.
Notes:
[i] For the purpose of this paper, we will exclude asset allocation funds – including target date funds and index funds due to their differing considerations in due diligence and menu construction needs. For more information on target date fund selection, please see our webinar on the topic.
Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice. Any views expressed herein are those of the author(s) and not necessarily those of Multnomah Group or Multnomah Group’s clients.