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 | 15 Separately Managed Accounts (SMAs), Mutual Funds, & Active ETFs* Stage 1: Unrestrained Manager Sourcing New ideas are generated through multiple sources: PMC's proprietary performance ranking tools, direct solicitation, referrals from clients and industry contacts, and trade publications. The analyst team uses quantitative performance ranking tools to focus research efforts on investment strategies that have achieved consistent risk-adjusted results. Stage 2: Multifactor Evaluation PMC's analysts apply a qualitative process to evaluate multiple factors of high-ranking investment candidates, emphasizing characteristics that lend confidence to a manager's future prospects. These include the thoughtfulness and integrity of the investment philosophy and process, personnel quality, and firm stability. In addition to interviewing key investment professionals through on-site visits and conference calls, analysts also employ single and multifactor returns-based analytics and holdings-based analytics and attribution. ESG or impact focused portfolios undergo an additional layer of due diligence to thoroughly evaluate the managers objectives and approach. Stage 3: Team Appraisal Working in teams assigned to specific asset classes or product types, PMC analysts present their research findings to the Research Team, testing their thesis and addressing gaps in their analysis before preparing a final recommendation. This stage of the process ensures the Research Team's collective experience and perspective are considered. Stage 4: Extensive Monitoring PMC's ongoing due diligence includes regularly updated analyst opinions and quarterly monitoring. Each quarter, the Research Team reviews performance versus expectations and flags quantitative and qualitative outliers for further examination. Analysts also continually monitor managers for material changes to the personnel, process, and firm. Once the evaluation process is complete, mutual funds, SMAs, active ETFs, and liquid alternative mutual funds would be assigned the appropriate IM&R status. In addition, they would be eligible to receive one or more of the portfolio attributes ("Select," "Watch," and "ESG") described later in this document. Quantitative Qualitative PMC's Research Team evaluates eight attributes of a manager and the investment strategy by applying a number of qualitative and quantitative techniques and tools. • Performance • Consistency of Style • Liquidity Analysis • Quality of the Firm • Quality of the People • Quality of the Process • Customer Service • Tax Liability & Efficiency • Quality of Composite *Envestnet | PMC considers strategic beta ETFs to be included in within active ETFs.