Investment Management Process

Investment Management Process

GW & Wade’s investment management process starts by setting an optimal asset allocation for your unique circumstances. Then we use a combination of actively managed mutual funds to populate that portfolio.

Our investment management committee oversees the funds that we recommend across a variety of equity and fixed-income asset classes to make sure the investments are what we believe as “best of breed.” A fund must undergo a rigorous screening process by our investment management committee before appearing on our preferred list. Funds that fail to meet our criteria may be dropped.

The investment management committee is made up of counselors and associates of the firm, and is chaired by one of GW & Wade’s principals. Each investment management committee member is responsible for tracking the group of funds that we recommend for a particular asset class (e.g. domestic growth, value and core stocks across a range of market capitalizations, international equities, sector-focused funds, hedge-style offerings and fixed-income funds).

Criteria

Our investment management committee looks for fund managers with a proven track record of producing above-market returns without taking on unreasonable volatility and risk. Some of the factors the investment management committee considers:

  • Absolute fund returns over various time periods compared to an appropriate benchmark
  • Returns relative to mutual fund asset class peers over various time periods
  • Volatility of the fund over time as measured by standard deviation
  • Fund manager outperformance as measured by such metrics as Sharpe Ratio and alpha
  • “Down-market” performance – an analysis of how the fund has performed historically during difficult market environments.
  • “Style drift” – a measure of how closely the fund’s managers have kept to their strategy
  • Manager tenure – confirmation that the fund’s current management has experience at the helm and can be credited with good performance by the fund
  • Amount of fund assets under management – to guard against funds that have become too large to nimbly execute their strategies
  • Tax efficiency

Tools

GW & Wade’s investment management committee routinely uses a variety of tools to evaluate mutual funds. Some examples include:

  • Morningstar – the premier provider of mutual fund research and reporting, this robust suite of analysis tools give GW & Wade the ability to perform in-depth investigation and comparison of thousands of funds, as well as detailed analyses of portfolios composed of diverse funds.
  • Zephyr – Zephyr’s Style Allocator lets us take a step beyond the fund data available through Morningstar to make more meaningful judgments about the performance of fund managers, including factors like style drift, excess performance against benchmarks and consistency of returns over time.
  • Manager Access – GW & Wade has broad access to the managers of the funds we recommend. If the investment committee has questions about any aspect of a fund’s management, or about a manger’s outlook, we can arrange a conversation with a member of that fund’s management team. We also regularly attend due-diligence meetings held by mutual fund families.
  • The Internet provides us with instant online access to fund-related news, performance data, tax information, fund prospectuses, as well as monthly, quarterly and annual fund reporting.