Implementation

As soon as we have formalized your investment strategy, right away we start to implement your investment program. Once again, keep in mind that asset allocation—deciding which assets to include in your portfolio (cash, stocks, bonds, etc.)—is the most important factor in the ultimate success of your portfolio. StateTrust ensures that the investment strategy is on-target for your needs and coupled with:

		Realistic performance goals
		Diversified assets
		Competent money managers

Style Diversification

Prior to searching for money managers, we spend some time with you determining how much to utilize subasset class styles. These are simply subdivisions of the traditional broad asset classes which include equities, fixed income, and cash. Using the subasset class styles is an excellent way to limit volatility with regard to your returns since different styles fall into favor at different times. It is an advantage in that you have less worry about your portfolio fluctuating periodically.

Subasset Class Styles: Equity

Core

Growth

Value

Subasset Class Styles: Fixed-Income

Active Duration

Core

Defensive

Extended Maturity

High Yield

Intermediate

Manager Selection

In your customized Investment Policy Statement (IPS), we lay out specific criteria for selecting money managers:

Money Manager Selection
Registration:	Money managers must be registered investment advisers (Within the state where business is conducted, and with the SEC)
Long-term performance:	Money managers should show at least five years of information on quarterly performance
Stability:	Money managers should show stability of investment personnel
Well-informed:	Money managers should be able to discuss investment strategies and philosophy
Free of legal actions:	Money managers should assure that they are not subject to or have pending, litigation censures/regulatory investigations. Client must be notified if these occur
Fiduciary status:	Money managers should recognize fiduciary status in writing
Ownership:	Investment company owners who are the decision makers have a tendency to do better with investments than regular employees
Size of firm:	Smaller companies are characterized by stronger focus on one style of investing
Assets under management:	Companies should be able to invest the money being placed. (10% of the current asset base is a good measurement)
Trading capability:	Investing expenses impact your plan’s performance. Analyzing the company’s trading capability to ensure that costs are well managed is key
Research:	How much research is the company doing on its own as opposed to accessing it from Wall Street along with many other firms?
Conflicts of interest:	Are the company’s alliances in terms of money management free of other activities?

Added to that, a thorough due diligence process is considered advisable. This process necessitates that certain performance indicators are explored in order to garner a complete picture of each money manager.

Performance Numbers

Looking at a money manager’s previous performance numbers lets us know if his/her returns are consistent. It is important that performance numbers are:

		Time weighted, listed quarterly
		A combination of real portfolios
		Audited/verified by an independent third-party
		Inclusive of net/gross of fees