RPAG Scorecard System Methodolgy

The scoring system is built around pass/fail criteria (0-10, with 10 being the best) and measures active, passive and asset allocation investment strategies. The system measures three different risk/return criteria (versus Morningstar’s single measure) as well as style characteristics, peer group rankings and multiple qualitative factors, including portfolio manager tenure, expenses and strength of statistics.

Eighty percent of the fund’s score is quantitative (made up of eight unique factors), incorporating modern portfolio theory statistics, quadratic optimization analysis, and peer group rankings (among a few of the quantitative factors). The other twenty percent of the score is qualitative, taking into account things such as manager tenure, the fund’s expense ratio relative to the average fund expense ratio in that asset class category, and the fund’s strength of statistics (statistical significance). Other criteria that may be considered in the qualitative score includes the viability of the firm managing the assets, management or personnel issues at the firm, and/or whether there has been a change in direction of the fund’s stated investment strategy. The following pages detail the specific factors for each type of investing strategies.

Combined, these factors are a way of measuring the relative performance, characteristics, behavior and overall appropriateness of a fund for inclusion into a plan as an investment option. General fund guidelines are shown in the “Scorecard Point System” table below. The Scorecard Point System is meant to be used in conjunction with our sample Investment Policy Statement, in order to help identify what strategies need to be discussed as a “watch-list” or removal candidate; what strategies continue to meet some minimum standards and continue to be appropriate; and/or identify new top-ranked strategies for inclusion into a plan.

Not all rating systems are created equal. The Scorecard System incorporates multiple criteria into the fund rating (or score). This comprehensive approach affords fiduciaries an extremely powerful investment tool they can use to select and monitor funds; it can be applied to any retirement plan, regardless of size or sophistication.

Our clients are served by Retirement Plan Advisory Group, a technology partner with $300 billion in 401(k) and pension assets under influence across 30,000 retirement plans serving 425 member firms.

RPAG Scorecard Methodology™ provides an objective, well documented fiduciary process for making plan investment decisions. This methodology relieves plan sponsors of the uncertainty whether they will be able to explain or, if necessary, justify their historical fund selection and replacement rationales (whether to participants, to recently on-boarded investment committee members needing a little backstory on your investment committee history, or to plan regulators) for selecting, watch-listing, or eliminating your plan'sinvestment options. Do you have a well-articulated fund monitoring process in place today? The Scorecard Methodology is used by 30,000 plans, guiding $300 billion in plan assets.