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Frontier’s ‘Manager Match’ Builds Teams that Succeed

28 March 2019

Robert E. Miller, CFA® | Managing Principal

It is no secret that fund managers disagree on a lot of things, but they do share one belief–their clients are anything but passive about their investments.

That’s why our team believes the actively managed mutual fund strategies we offer at Frontier Asset Management are an attractive choice for investors looking to meet long-term return targets and outperform indexes while minimizing risk. We’ve certainly seen the cascade of money moving to passive strategies as investors and their advisors have given up on outperforming an index and have shifted their focus to fees instead.

We have a better idea, one that has been delivering results for more than 20 years. While the parade to passive has swept across the industry, Frontier has stayed on our proven course and investors continue to trust in us, for good reason. Our philosophy of “downside first focus” guides all our decisions. We build mutual fund strategies on the foundation of our Manager Match process.

This proprietary screening process identifies managers who are extremely skilled in a variety of market environments and display the special characteristics that make them a great fit for our team. At the heart of Manager Match is “returns-based style analysis,” which reveals managers who have excelled in the past and are likely to perform well in the future. The best managers use many different approaches to stock selection and pursue opportunity where they can find it.

We develop a unique benchmark for each manager and then analyze their performance against it. We then apply qualitative screens to each manager to identify investing intangibles – ethics, flexibility, passion, creativity and the like. How do they perform in poor markets? Do they display independent thought? With our quantitative and qualitative screens in place, we add the best prospects (many call them our geniuses) to our “hire list,” which includes approximately 220 mutual fund managers representing many asset classes and investment styles.

For each Frontier strategy we manage, we design a unique asset allocation across several asset classes. Through the Manager Match process, we assemble a team of managers for each investment strategy whose styles add more value and complement each other.

As with any team, success is measured against the ultimate goal. For us, that goal is to achieve the desired return for a client without breaching the downside risk target for that client. Every month, just as a good coach will assess the individual performance of his players, we review the performance of our teams.

Are we on track? Is there a better combination of managers we could employ? Is now the time to make a change?

Our process is dynamic. We’re always evaluating how our team members are working together. If there are new investment managers who may be a better fit, we’ll add them to our team. The team lineup may change, but the goal does not. We strive to create value for the client through asset appreciation and downside protection.

We believe in active management. Through Manager Match, we have selected fund managers for our team because we believe they’re among the best of the best and exhibit qualities that are aligned with our philosophy. We expect them to perform well in the future for our clients.

Manager Match has served us well and we continue to research ways to improve it. The world is always changing, and we make needed adjustments to maximize returns and reduce risk. There’s nothing passive about our efforts on behalf of our clients.

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