PORTFOLIO DESIGN

Using non-fiduciary guidance from Fi360 tools, our portfolio lineup is chosen and updated from the 32,000 plan and ETF options offered through our custodian, Matrix Trust Company. Each month, Matrix makes available an updated data set of available investing options.  From this data set, we cull the best available options that meet our investing strategies, and offer these in our plan lineups. The list of potential investing options is also screened and preliminarily scored through the fi360 Fiduciary Toolkit and, if applicable, the fi360 Stable Value Vision product.  Through these tools, we narrow, score and rank the investing options that fit our lineups.

Finally, the proposed list of investing options is sent to our 3(38) advisor, LeafHouse Financial, for detailed fiduciary scoring and final review.  If approved by LeafHouse, an investing option is added to our portfolio lineup through our recordkeeper, Vestwell.

Our fundamental investing goal is to diversify assets to minimize the risk of large losses, while also striving to achieve plan performance to the greatest extent possible, in any given market conditions. This is what ERISA dictates–but is quite different from how most plan administrators approach fund management.

Many active managers have placed plans at significant risk for large losses in a volatile market by failing to properly diversify.  As a result, most plans now perform in a correlated fashion, in good times and bad.  A random review of Form 5500 filings for the year 2022 reveal staggering plan losses, nearly across the board. These losses derive from active managers’ commitment to illiquid fixed income assets whose fair market value is opaque, and therefore ignored or postponed for consideration to another day.

On the other hand, passive management strategies offer the safest solutions in a volatile market, but don’t give plans the opportunity to potentially outperform the market.

We work hard to understand and properly apply portfolio diversification, so that assets can perform well in growth markets, and stabilize in volatile markets.