What is the purpose of our process?

To identify, evaluate, and verify the investment opportunities that provide superior risk-adjusted returns to the benchmark and align with the strategies of the model/allocation that they are assigned to.

The Process

Model Allocations / Initial Screening

Use of the resources available (Daily Performance Reports and Diversified Plus Allocations) from LPL’s experienced research team in combination with our own independent research to select the allocations per sector/class of our managed portfolios.

Quantitative Review

This is an evaluation of funds from a performance perspective. We use comprehensive statistical analysis of key performance and risk metrics to measure return consistency (average returns over selected time periods), performance attribution (alpha), and risk/volatility mitigation (beta and sharpe ratios). These statistics result in a scoring evaluation that reduces the potential funds to the Top 4 in their categorical review.

Qualitative Review

FWFG values Fund Companies/Managers that have a consistent, long-term approach that aligns well with our core goals and values. We look for companies with a clearly stated investment process and management approach (Top down or Bottom up). Management compensation is important as well and we prefer that fund managers are compensated based on the long-term objectives and performance to better align with our model strategies. We evaluate manger and analyst tenure and experience in the class/sector, as we believe that not one company is the best in all classes/sectors. For this reason, we evaluate our portfolios for Fund Company duplication and that is a consideration in the selection process.

Fund Selection and Monitoring

Using a combination of the Quantitative Review to narrow the fund selections, coupled with the Qualitative Review, Breton and Andrew select the fund for the portfolio that they believe is best for the current market/economic environment and aligns well with the portfolio objectives. The portfolio allocations and fund selections are comprehensively and continually reviewed each quarter. At times economic, political, market trends, environmental and other factors may result in an induced review or allocation change as well.

Conclusion

Breton and Andrew are committed to diligently utilizing this fundamental and well-defined analysis process to manage investment portfolio allocations. We believe the results of this process are well-managed, risk-adjusted returns that align well with our client’s financial objectives and provide superior performance to the benchmark.