Fund Analysis

Analyzing the Funds — Methods to the Madness

Since a Plan is only as good as the funds it offers we strive to offer the “best of the best” and continually monitor and update as necessary.

We provide a comprehensive analysis by utilizing multiple tools, including Zephyr's Style Advisor, Morningstar Direct, FI360 and proprietary systems.

Our fund analysis includes the comparison of various statistical measures of risk and return. In addition to statistical measures, we will consider subjective measures. For example, when there is a change in the status of the stability of a fund family, such as a turnover in fund manager or a legal problem with the fund family, we will proactively review the effect to a fund and suggest a replacement fund, when appropriate. (i.e. American Funds – Growth Fund of America and PIMCO Total Return)

Our proprietary systems include attribution analysis and a comprehensive scoring system that includes:

  • Upside & Downside Capture
  • Style: Correlation & Style Drift
  • Performance: Excess Return & Tracking Error
  • Risk-Return: Standard Deviation, R-squared, Alpha, Beta & Sharpe Ratio

Further, we currently utilize our comprehensive scoring system that analyzes over 16,000 funds. We utilize this due diligence system to narrow our search - we then interview representatives of each of the top 3 finalists companies to discuss the long term fundamentals of the underlying fund.

Strategies made available to our clients go through a disciplined strategy review process. When reviewing new strategies, the critical steps in the Pension Advisors strategy research process are:

1. Sourcing
Investment strategies are sourced primarily through the depth of contacts the Pension Advisors investment professionals have in the investment management industry. Pension Advisors places a high degree of value in sourcing strategies through investment professionals whose judgment the firm has grown to know and trust.

2. Quantitative Analysis
Once a new strategy candidate has been sourced, the firm’s initial analysis includes a quantitative review of the strategy. We will review characteristics that may include historical risk-adjusted return in relation to a relevant benchmark and peer groups. Risk measures including as alpha, beta, Sharpe Ratios, and drawdown analyses may be reviewed.

3. Qualitative Analysis
Pension Advisors will continue its review by focusing on qualitative characteristics including a review of the strategy’s organization and investment process. A qualitative review of the factors such as ownership structure, depth of staff, assets under management and growth trends in the firm's asset base are considered.

4. Manager Monitoring
Through regular conference calls and face-to-face meetings, each strategy selected by Pension Advisor is periodically reviewed to confirm that it continues to possess the attributes that enabled it to pass the firm’s initial strategy review. Items such as organizational changes, investment process changes, style drift, performance or a failure to meet our expectations are among the critical factors reviewed. If Pension Advisors loses confidence in the strategy’s ability to perform as it had in the past, it will recommend that clients replace the strategy with a suitable alternative.

Benchmarking:
We benchmark our investments by using both holdings-based and returns-based style analysis. We utilize Zephyr style-based analysis to determine a best fit index. We then analyze the strategy’s holdings to determine if the assigned benchmark is suitable for the strategy.

Once a benchmark is assigned to a strategy we are reluctant to make changes as consistency is important to our process. If a strategy’s style changes, we will review the strategy to make sure the shift is longer term in nature before a change is considered.

For assistance with your 401(k) fund selection process, call us at 877-595-0833 or fill out the form below.


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The contribution limits for 401(k) plans and individual retirement accounts will stay the same in 2017. Employees will be eligible to defer paying income tax on up to $18,000 that they contribute to 401(k) and $5,500 to their IRA.

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