In-depth due diligence is performed through rigorous qualitative and quantitative assessments on each investment manager, portfolio management team and investment strategy. This allows us to develop a short list of managers and strategies that align with targeted Fund characteristics and, ultimately, select what we believe to be best-in-class managers for inclusion in the Fund. While both qualitative and quantitative research is integral to this process, qualitative factors account for 80% of our manager selection decision-making process.
Optimization is a key step in the investment process. GuideStone conducts numerous simulations – analyzing various manager combinations across historical time periods – to evaluate hypothetical Fund performance and characteristics against established objectives and risk/return targets. In addition, it is critically important to anticipate how various manager composites may perform into the future – holdings-based analytics as well as risk-factor decomposition assist in this determination. The resulting target manager weightings are optimized in alignment with the Fund’s established risk/return profile, with the goal of enhancing risk-adjusted returns for investors.