Rigorous Asset Manager Due Diligence
We start with the premise that most asset managers have no economically justifiable reason for remaining in business, as average market performance can be attained in most asset classes by paying virtually no fees. As such, identifying the asset managers who will outperform their peers is not easy. This assessment of any manager against his chosen investment domain requires a combination of art and science, rooted in years of experience and learning from good and bad decisions. The best asset managers cannot be chosen in isolation, but must be grouped with relevant peers for direct comparison of their teams, strategies, past performance, infrastructure and operations, investment terms, third party service providers and risk controls. Veteran specialists of each investment sector (i.e., sub-asset class within geographic market) must make these tough decisions, informed by a deep understanding of the specific sector of the investment world and the critical requirements for success in those sectors. In our view, the best managers will have a significant portion of their own personal assets at risk against their success.
We have shaped our manager evaluation framework based on over 5,000 asset managers we have evaluated (>10,000 screened) since the inception of the firm across all asset classes and geographic markets. This framework cannot be distilled down into a finite set of diagnostics, but rather is a dynamic model that varies by asset class, geographic market, specific strategy and economic environment. We believe that, to spot the most talented managers, "it takes one to know one". Accordingly, our team includes many veteran asset managers and face to face manager evaluation is conducted by our most senior team members.