Our Scorecard ℠ System methodology incorporates both quantitative and qualitative factors in evaluating fund managers and their investment strategies. It is built around pass/fail criteria (on a scale of 0 to 10) and has the ability to measure Active, Passive and Asset Allocation investing strategies. We evaluate Active and Asset Allocation strategies over a five year time period and Passive strategies over a three year time period.
Eighty percent of a fund’s score is made up of eight unique quantitative factors, inccluding modern portfolio theory statistics, quadratic optimization analysis, and peer group rankings. The other 20% of a fund’s score is qualitative, taking into account manager tenure, expense ratio relative to the average fund expense ratio in that asset class category, and the fund’s strength of statistics (statistical significance). Other criteria that may be considered in the qualitative score includes the viability of the firm managing the assets, management or personnel issues at the firm and/or whether there has been a change in direction of the fund’s stated investment strategy.
Combined, these factors are how we measure the relative performance, characteristics, behavior and overall appropriateness of a fund for inclusion into your plan as an investment option. General fund guidelines are shown in the “Scorecard ℠ Point System” table below. We designed our Scorecard Point System to be used in conjunction with our Investment Policy Statement, which identifies “watch-list” or removal candidates and minimum standards.
If you would like us to review an existing fund or a fund you are considering adding to your 401(k) investment menu, please provide us with fund symbols and your contact information by clicking here.