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Nothing Passive About Our Approach

Nothing Passive About Our Approach

09 July 2018

The Strategist

Investment industry visionary Gary A. Miller, CFA, created Frontier Asset Management, LLC in 2000. He has managed mutual fund investment strategies since 1987. His background in math and engineering led him to rethink the way strategies are constructed and managed. Frontier’s forward-looking, highly analytical investment process starts with a philosophy of Downside First Focus and builds strategies that seek to yield the most return for a given level of risk. Frontier was named Strategist of the Year in 2015 by Envestnet / PMC and Investment Advisor Magazine.

Globally Diversified & Alternative Strategies

Frontier’s strategies comprise actively managed and index-based mutual funds. Typically, a strategy will
hold between 8 and 14 funds. Frontier’s well-established track record of utilizing top-quality managers is
the product of our proprietary Manager Match process, which identifies select mutual fund managers,
highly experienced professionals who are vetted, tested and demonstrated performers.

Simple, Powerful Philosophy

For each strategy, the Frontier team seeks to manage risk to specific target levels, to achieve a given level
of return for that risk level, and to provide consistently added value. To achieve this goal, we stay true to
our foundational philosophy, Downside First Focus, to manage downside risk and cushion clients’
portfolios during unforeseen steep market declines. Through our Manager Match process, we assemble
a team of top-quality fund managers and then proactively adjust global asset allocations based on longterm
return expectations, select added-value mutual funds, optimize combinations of mutual funds and
continuously test and fine-tune our investment processes in monthly cycles.

Downside First Focus

Each month, Frontier quantifies the long-term expected returns of the 16 asset classes that we currently
invest in, possible downside exposures, and correlations. Our strategies are designed to not lose more
than their stated loss parameter target over a 12-month time period. We build each strategy first with
downside protection as the independent variable and then optimize it for return.

Manager Match

Mutual funds give us access to many of the world’s most experienced investment managers. Our
proprietary selection process, Manager Match, identifies those select mutual funds that are most likely to
achieve consistent relative outperformance. We find managers who specialize in a wide array of asset
classes and investment styles.

Using returns-based style analysis, we identify managers who are likely to perform well in the future. We
develop a unique benchmark for each manager and analyze performance against it. We then apply
quantitative and qualitative screens to determine if they should be added to our select “hire list.”

Each strategy utilizes the funds on the hire list whose unique investment styles add value and
complement each other. Each month, groups of funds are analyzed to determine the single combination
of funds that closely matches the long-term asset allocation, with reduced risk. If a better combination of
managers is matched, we may change the funds in the strategy if the adjustment will maximize the return
and reduce the risk.

This dynamic approach to asset allocation implements small, calculated deviations from the strategic,
long-term asset allocation targets.


Notes:
Past performance is no guarantee of future returns. Nothing presented herein is or is intended to constitute investment advice or recommendations to buy or sell any types of securities and no investment decision should be made based solely on information provided herein. There is a risk of loss from an investment in securities, including the risk of loss of principal. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular investor’s financial situation or risk tolerance. Diversification and asset allocation do not ensure a profit or protect against a loss. Before investing, consider investment objectives, risks, fees, and expenses.
Exclusive reliance on the information herein is not advised. This information is intended to be educational and is not tailored to the investment needs of any specific investor. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. This material has been prepared for information purposes only and is not intended to provide, and should not be relied on for, accounting, legal, investment or tax advice.
Envestnet | PMC has presented its SMA Manager of the Year awards since 2004. Frontier Asset Management won the Strategist category in 2015. The award finalists and winners were chosen using the systematic, proprietary, and multi-factor evaluation methodology developed by Envestnet | PMC’s Premium Research Solutions. Its evaluation framework considers performance, firm profile, customer service, investment process and style, composite, tax efficiency, and other quantitative and qualitative criteria. Firms had to have a minimum of $200 million in assets and their management team had more than 3 years of experience. There were 108 strategists considered. Frontier did not pay a fee to be included in the SMA awards. The award was based on composite performance and not representative of the performance of any single client. There is no assurance that favorable performance will be experienced in the future.

Portfolio Management

Mutual Funds