Manager Selection

There are over 10,000 mutual funds and ETFs in existence today. At EBW, we have a defined process to select the funds that fit best into our strategies. There has been considerable debate over the use of active management versus passive management. Active management uses a portfolio manager and research team in an attempt to either outperform the fund’s benchmark index or to better control risk relative to their index. Passive management, also known as indexing, does not have a human element and seeks to mirror an existing benchmark index. Active management carries higher fees than does passive management and therefore must overcome those fees in order to add value for the investor. Our research has shown that active and passive management do well in different economic conditions. Rather than choose sides, our philosophy embraces both strategies in attempts to manage risk, participate in robust markets and control costs.

Our Investment Policy Committee starts selecting our funds by applying filters to the entire mutual fund and ETF universe in order separate those funds that meet our requirements from those who do not.

The first step of our screening process includes:

  • Performance
  • Consistency
  • Manager tenure
  • Expenses
  • Style consistency
  • Risk

Once we’ve narrowed the field down to the funds that meet our criteria, we meet with each fund’s management team to better understand their people, process and philosophy. After we are satisfied that we have collected all of the relevant information, our Investment Policy Committee will determine which of the funds will be added to our strategies.

After investments are added to our strategies, we continuously monitor them for adherence to our criteria. If we identify that a fund no longer meets our requirements, we place the fund on a formal “watch” list, subjecting the management team to increased scrutiny and more frequent communication. At the end of this process, our Investment Policy Committee will determine if the fund should remain in our strategy or be replaced with a new fund.