Investment Manager Research
A proprietary research process that relies on a sound philosophy, rigorous due diligence efforts, and state-of-the art analytical tools.
Investment Philosophy
Beacon Pointe investment solutions include active, passive, alternative and socially responsible strategies on an open architecture platform.
Core Tenets

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

Optimally diversify portfolios across asset classes/investment styles and formulate strategic asset allocation targets.

Entrust high-caliber managers characterized by strong research cultures and fundamentally-driven investment styles.

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

  • High active share
  • Intrinsic value, margin of safety driven,
  • Asset managers, not asset gatherers
  • Invested alongside clients
  • No outside influencers or stakeholders
  • Not often found on large bank platforms

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

Manager Monitoring

A manager’s poor performance does not automatically translate into a 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 being terminated is dependent upon 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-flavor.

It is usually qualitative factors that create cause for a manager termination, and Beacon Pointe limits this disruption risk and exposure through intense, upfront due diligence.
Manager Evaluation and Due Diligence

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

STAGE 1ManagerScoring

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 rick-adjusted returns for our clients over a full market cycle.

STAGE 2QuantitativeAnalyses

In evaluating a manger’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).

STAGE 3QualitativeEvaluation

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.

STAGE 4PortfolioAnalyses

Onsite due diligence meetings are arranged; Beacon Pointe visits every investment manager that is recommended to clients. At this meeting, qualitative factors and any concerns that may have been formulated through initial analyses and observation are addressed.

STAGE 5ProductEvaluation

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%).

STAGE 6FinalApproval

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.