Issue link: https://resources.envestnet.com/i/1527492
FOR ONE-ON-ONE USE WITH A CLIENT'S FINANCIAL ADVISOR ONLY Envestnet | PMC Investment Methodology Guide | 11 vehicles demand unique due diligence requirements, all of PMC's evaluations and approvals follow a comprehensive process. PMC's goal is to identify investment quality by employing comprehensive quantitative and qualitative analysis, sound judgment, and an objective, transparent methodology to deliver a broad list of approved managers across asset classes, risk tolerances, styles, philosophies, and vehicles. PMC's process results in a strategy earning the "Approved-Quantitative" or "Approved-Qualitative" research status, depending on the primary research method used for approval. PMC stands behind these strategies from an investment fiduciary standpoint, regardless of the form of due diligence used to approve them. Approval Process Objectives PMC seeks to apply a consistent approval process to: • provide a broad list of approved investment managers across asset classes, risk tolerances, styles, philosophies, and vehicles; • meet industry best practices relating to objective, transparent methodology; and • select managers who offer an attractive risk/reward proposition based on either our proprietary quantitative ranking model or the Research team's due diligence process. For style-based investment strategies, including actively managed SMAs, traditional mutual funds, and passive strategies, such as ETFs, PMC primarily employs a quantitative due diligence process to approve investment strategies. For a select group of SMAs, ETFs, and mutual funds, PMC also applies a concurrent qualitative due diligence process to foster deeper coverage on strategies and in-depth research content to support our CIO Support and Investment Consulting Services clients. For liquid alternatives and strategist portfolios, PMC applies a qualitative due diligence process to approve strategies. Both quantitative and qualitative processes are executed simultaneously Annual Due Diligence Questionnaire This document helps determine if a manager has maintained ongoing compliance with industry rules and regulations and Envestnet internal requirements for continued availability on the platform. All managers on the Envestnet platform must complete the Annual Due Diligence Questionnaire annually. The questionnaire reviews general information about the firm and products offered, the compliance program, business continuity and disaster recovery, data protection, proxy voting and regulatory reporting, GIPS and performance audits, and trading. Business Partners Acceptance Committee (BPAC) Review The BPAC, consisting of a cross-section of individuals from Envestnet's Compliance, Legal, Research, Manager Services, Business Development, Product, and Sales departments, meets weekly to decide on Available status candidates. BPAC Product Review Considerations Envestnet's BPAC considers all aspects of the submitted request for information (RFI) and bases its decision on the following factors: • Current Form ADV / legal or regulatory concerns • Satisfactory business documentation, i.e. business continuity plans, data security, etc. / sound operating infrastructure / trading practices • Acceptable minimum firm assets: generally, $125,000,000 • GIPs-compliant (or otherwise audited) performance—generally a minimum of 36 months • Strong risk-adjusted performance relative to stated benchmarks and peer group • Relevant product offering given current roster of managed products / operational compatibility / trading requirements, etc. • Equitable Trade Rotation: Managers who do not follow an equitable trade rotation policy for Envestnet's clients will continue to hold their portfolio on the platform, however a disclaimer will be added to their strategy and this portfolio may not retain its "Approved" research status on the platform. Products are terminated from the platform if there is a corporate event, or if the money manager or BPAC determines that a viable contract and working relationship can no longer be maintained. A terminated product's research status is changed to "n/a," and is dropped from "Available" to "Closed to New," "Inactive," or "Terminated." PMC Research and Due Diligence Contact us for more details: pmcconsulting@envestnet.com @