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RESEARCH

Investment Manager Research & Selection

The consultants at Gosselin Consulting Group have worked through dynamic market cycles dating back to the mid-1990‘s and have witnessed first hand the impact manager selection can have on a plan line-up and participant account balances. As a result, our “retirement appropriate” investment manager and asset class

recommendations are based purely on investment merit and client objectives, a manner consistent with

prudent fiduciary practices. Key characteristics of our research process include:

  • All-inclusive starting universe (mutual funds, collective trusts, and separate accounts)

  • Proprietary bottom-up classification methodology (no reliance on third-party classifications)

  • Dynamic economic and market overlay (to account for changing conditions)

  • Comprehensive historical research (to avoid point-in-time bias)

  • Exhaustive team and career analysis (to understand drivers of success)

  • Fully documented research process, including Request for Proposal and meeting notes (for fiduciary purposes)

  • Research emphasis on:

Style Purity   •   Holdings Quality  •   Risk Control & Management

Team Stability  •   Demonstrated Long-Term Success  •   Fees

Repeatability of Investment Process & Approach

How Our Approach to Higher Quality Investment Managers Helps Form a "Retirement Appropriate" Investment Line-Up

Using domestic equity investment manager selection as an example, we illustrate below how higher

quality stocks can provide downside protection during calendar years with negative returns. This

evidence spans the period of 1997 - 2018 and shows that higher quality stocks have outperformed lower

quality stocks and the overall market every negative calendar year since 1998.

Russell Stability Indexes ©

Source: Morningstar Direct

The indexes measure a portion of the market based on the sensitivity to economic cycles, credit cycles, and market volatility, referred to as stability.

Stability, as defined by Russell, is measured at the company level in terms of volatility (earnings, total return), leverage (debt/equity), and return on assets. The more stable half of the index is called the Defensive© Index and the less stable half is called the Dynamic Defensive© Index.

 

Gosselin Consulting Group uses these indexes as one example of security quality differentiation. We define defensive companies as higher quality and the dynamic companies as lower quality. 

Note: The views and/or opinions expressed herein solely reflect those of Gosselin Consulting Group LLC. They should not be construed as investment advice or recommendations by Gosselin Consulting Group

LLC and are subject to change without notice based on market and/or other conditions. Past performance does not guarantee future results.

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Furthermore, higher quality stocks historically outperform lower quality stocks (and the overall market) at

significantly reduced risk levels, as illustrated below for the period of 7/1/1996 - 03/31/2021.

MorningStar_Chart_7.jpg

The indexes measure a portion of the market based on the sensitivity to economic cycles, credit cycles, and market volatility, referred to as stability.

Stability, as defined by Russell, is measured at the company level in terms of volatility (earnings, total return), leverage (debt/equity), and return on assets. The more stable half of the index is called the Defensive© Index and the less stable half is called the Dynamic Defensive© Index.

 

Gosselin Consulting Group uses these indexes as one example of security quality differentiation. We define defensive companies as higher quality and the dynamic companies as lower quality. 

Note: The views and/or opinions expressed herein solely reflect those of Gosselin Consulting Group LLC. They should not be construed as investment advice or recommendations by Gosselin Consulting Group LLC and are subject to change without notice based on market and/or other conditions. Past performance does not guarantee future results.

Russell Stability Indexes ©

Source: Morningstar Direct

Gosselin Consulting Group has been using quality metrics as part of our “retirement appropriate” investment manager selection process for the past 17+ years. So how do we define quality? The illustration below describes some of the key criteria that go into defining higher quality equity and fixed income managers:

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