Issue link: https://resources.envestnet.com/i/1527492
10 | Envestnet | PMC Investment Methodology Guide FOR ONE-ON-ONE USE WITH A CLIENT'S FINANCIAL ADVISOR ONLY PMC Research Statuses All strategists, SMAs, mutual funds, and ETFs on the platform are reviewed either quantitatively or qualitatively by the PMC Research team, and are assigned one of three research statuses. Identifying the research status for all managed products is part of the standard available default content shown in our Research Center and on individual portfolio profile pages. Many Envestnet platform clients limit their advisors to those portfolios that are Approved (Quantitative and Qualitative). Clients can clarify and restrict their investment offering for their advisors and provide a smaller but still extremely comprehensive selection of portfolios for their advisors to use. The PMC team updates the research status of all managed products on a quarterly basis and provides all Envestnet clients with a list of portfolios that are added to or removed from the Approved List. In addition, PMC provides basic recommendations of replacement portfolios for those strategies that fall off the Approved List each quarter. PMC provides this content and notification to those clients who may enforce that their advisors use Approved managers only. This content distills at a very high level PMC's ongoing monitoring of the research suitability of portfolios for general platform clients, and provides timely and updated viewpoints on the portfolios on the general Envestnet platform. PMC's platform-level research content does not include in-depth research notes on any specific managers, nor any other materials, content, or services. The following section provides additional insight and detail on these research statuses, and the research processes from which they are derived, that are applied to the wide range of investment strategies and vehicles on the platform. Available Status Mutual funds and ETFs are subject to the additional oversight requirements of the Investment Company Act, and most are made available on the platform without additional onboarding requirements. However, managed portfolios (SMAs and strategist portfolios) must go through additional onboarding due diligence procedures. To be considered for inclusion on the Envestnet platform, new SMAs and strategist portfolios also must complete a New Manager RFI Questionnaire and be reviewed by Envestnet's Business Partners Acceptance Committee (BPAC). Approved Status PMC conducts the research and due diligence that drives the evaluation and approval process of investment strategies on the Envestnet platform, including SMAs, strategist portfolios, mutual funds, liquid alternatives, and ETFs. Although different investment Three PMC Research Status Available These portfolios are available to advisors for use in client portfolios but have undergone no investment due diligence assessment by PMC or Envestnet. All mutual fund, SMAs, strategist portfolios, and ETF products added initially to the Envestnet platform are assigned the "Available" research status. Approved-Quantitative These portfolios have undergone PMC's due diligence process and are actively monitored, via a quantitative process only, on an ongoing basis. This process measures risk and return for each portfolio, and ranks it against its investment style peers, and is updated each quarter. Portfolios that fall below certain thresholds as a result of this process are removed from the "Approved-Quantitative" list. We do not use this methodology to approve proprietary PMC portfolios. Approved-Qualitative These portfolios have undergone PMC's qualitative due diligence process and are actively monitored by both PMC's quantitative and qualitative processes, on an ongoing basis. The due diligence process uses periodic reviews to monitor third-party money managers, who also have been thoroughly vetted by PMC's team of experienced research analysts. The process includes statistical analysis, site visits, and qualitative assessments of managers' ability to execute their strategies. The "Approved-Qualitative" research status is applied to mutual funds, SMAs, ETFs, and strategist portfolios. 2 Portfolio Risk Scoring Policy Contact us for more details: pmcconsulting@envestnet.com @