How does Stonegate select outside portfolio managers?
We start with automated computer filters and screens that enable us to assess thousands of portfolio managers. During the search, we focus on the key factors that, according to proven, reliable academic studies, indicate the potential for a manager’s performance to be better than average. Parameters that we examine include expense ratio, manager tenure, turnover, and tax efficiency. Generally only 10-15 managers pass the test of our filters in each asset category. We then assess each select manager more thoroughly. Stonegate has invested enormously in software and tools that help us properly assess a managers investing skills–greatly increasing the odds that their performance will justify their cost. We also generally prefer investments that offer investment managers institutional class pricing. Management fees for mutual funds for example are typically .5% lower than the same fund available to the public. We lean toward value rather than growth, a strategy that many academic studies
