Investment Research Philosophy and Methodology

Our proprietary investment research process has been refined over decades and is rooted in a sound philosophy and rigorous due diligence, producing consistent manager selection results. Beacon Pointe investment solutions are customized for each client and include active, passive, alternative, and socially responsible strategies on an open-architecture platform.

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Core Investing Tenets

Customized solutions

to assist clients with meeting their objects in accordance to their specific risk and return profiles.

Optimally diversified

portfolios across asset classes and investment styles, and formulate strategic asset allocation targets.

Entrust high-caliber managers

characterized by strong research cultures and fundamentally-driven investment styles.

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The third-party asset managers that we recommend to our clients invest for stability and growth, yet are nimble enough to take actions that help achieve goals. They move beyond the constraints of index composition and rigid style characteristics to focus instead on identifying what they believe are the best investments to achieve optimal results. As a result, the managers of Beacon Pointe strive to protect capital when markets decline.

– Michael Dow, , CAIA, CFA, Chief Investment Officer

Investment Manager Selection

When evaluating active managers, the Beacon Pointe Investment Research Team looks for the following preferred manager traits:

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High active share

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Invested alongside clients

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Intrinsic value, margin of safety driven

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No outside influencers or stakeholders

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Asset managers, not asset gatherers

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Not often found on large bank platforms

Investment Manager Monitoring

A manager’s poor performance does not automatically result in termination. However, it will trigger additional scrutiny and oversight, as the manager is placed on Beacon Pointe’s “watch list.” How long a manager is on watch before termination depends on the manager’s unique circumstances.

Watchlist / Termination Triggers:

Organization

A material change in the organization structure, ownership, or investment team.

Portfolio

A deviation from the stated investment style, portfolio construction process, or target risk parameters.

Performance

A significant performance deviation from the benchmark or peer group that is not attributable to the manager’s style being temporarily out-of-favor.

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Manager Evaluation and Due Diligence

There are six distinct stages to the Beacon Pointe process for selecting active investment managers:

Manager Scoring

The universe of potential managers and investment strategies includes approximately 30,000 options. Technology allows for narrowing of the list quickly and efficiently to recommend managers that are most likely to generate superior risk-adjusted returns for our clients over a full market cycle.

Quantitative Analyses

In evaluating a manager’s track record, Beacon Pointe focuses on measures of risk (down capture ratio, downside risk, largest drawdown, volatility, and beta), risk-adjusted returns (Sharpe ratio and information ratio), and consistency (rolling 5-year relative to peers based on several different metrics).

Qualitative Evaluation

Beacon Pointe strongly emphasizes the evaluation of qualitative components of an investment manager, assessing the key investment professionals and portfolio managers of each firm, as well as the manager’s structure, philosophy, and process.

Portfolio Analyses

Due diligence meetings are arranged; Beacon Pointe confers with investment managers who are recommended to clients. At this meeting, qualitative factors and any concerns that may have been formulated through initial analyses and observation are addressed.

Product Evaluation

Beacon Pointe dives deeper into the management firm’s resources, including research, information technology, operations, compliance, trading and client service. The research findings and insights are summarized into a Manager Scorecard and the Final Score is determined, which is a combination of quantitative factors (25%) and qualitative factors (75%).

Final Approval

The Beacon Pointe Investment Committee invites key decision-makers of the subject firm to present to the entire Beacon Pointe investment team. If the manager is approved by super majority vote, it is added to Beacon Pointe’s proprietary Focus List of approved investment managers. The manager is closely monitored on a routine, on-going basis.

Alternative Investments and Values-Based Investing

Beacon Pointe Advisors has a robust arsenal of both Alternative Investments and Values-Based Investing offerings. Our Investment Research Department and wealth advisory teams are dedicated to understanding the goals, values, and missions of each client. These unique needs and values are as broad and as different as every unique client. Beacon Pointe has extensive depth of expertise in these areas and is well-equipped to assist both institutional and private clients with aligning these unique areas of focus to create customized investment portfolios to help achieve these goals.

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Insights and Updates

Important Disclosure: Investing involves risks, including but not limited to the potential for the permanent loss of principal.