Manager Research for Portfolio Construction

Manager research is an essential component of Glenmede’s Endowment and Foundation portfolio construction process. Extensive analysis is the first step to identifying potential managers for use with client accounts.

A Comprehensive Process 

The Endowment and Foundation team relies on a rigorous research and selection process to identify reputable managers with strong track records and competitive fee structures. Our goal throughout this extensive vetting is to offer clients exposure to all major asset classes. 

 1. Initial Due Diligence 

Through a variety of methods, including industry contacts and professional networks, as well as Glenmede investment professionals, clients, and prospects, we identify a list of potential strategies, including managers that do not report to databases or investment teams that have moved to different firms. Once a set of managers is identified, we typically perform quantitative analysis to review a manager’s risk statistics. The analysis is performed on net-of-fees returns to create statistics such as beta, Sharpe and Sortino ratios, as well as up/down capture. Peer group rankings, style drift, correlation, and drawdown statistics are also examined. This analysis helps the team develop a profile of a manager’s investment style and overall skill level. 

2. In-Depth Review 

However, purely quantitative analysis often lacks context. To determine if a manager’s process can be expected to deliver future outperformance, the team meets with the lead portfolio managers and analysts to review items such as their investment philosophy, purchase and sale protocols, portfolio construction methodology, and operations. We want to find managers that exhibit a clear investment philosophy and process that we believe to be repeatable into the future. 

3. Committee Review 

After we perform thorough due diligence on a manager or strategy, we present them to our research committee for approval. If approved, we add them to the focus list, making them available for client portfolios. 

Ongoing Monitoring 

We monitor all approved strategies on a regular basis from both an investment and operational perspective, paying close attention to any variations in performance, changes in assets under management or personnel, and any regulatory actions. If anything outside of our expectations is uncovered during our reviews, we determine the appropriate course of action, which typically begins with further conversations with the manager.