Strategy Based Investing is a better way to think about asset managers, making it easier to understand the investment process, form meaningful peer groups, evaluate performance, and build better investment portfolios. While our search started with a focus on building a better framework for categorizing managers, it has since evolved into a superior methodology for building fund and individual stock portfolios.

The multi step development of the US and international equity strategy identification process began in 2005. The first step was an initial identification effort based on our collective knowledge of the industry. In the next step, equity managers, who managed or had managed a wide variety of equity funds, were interviewed in order to expand and refine the proposed identification system.

After strategy identifying active US equity open end mutual funds, it was possible to form peer groups based on the strategy being pursued by the fund. Performance statistics for each strategy peer group were calculated using monthly return data for the 1988 through 2007 time period and the annualized results are reported in the table below.

After strategy identifying active International equity open end mutual funds, it was possible to form peer groups based on the strategy being pursued by the fund. Performance statistics for each strategy peer group were calculated using monthly return data for the 1993 through 2007 time period and the annualized results are reported in the table below.

A fund’s Diamond Rating (DR) is the combination of two individual fund scores, one capturing how active is the manager and the other how successful the manager has been. The DR provides help in identifying successful active managers.