“An in-favour style, slick marketing presentation and an articulate fund manager can easily create the illusion of true skill. Therefore proper due diligence is a crucial component of manager selection.”
Principles
Good managers exist but are rare
Beating the market is difficult, especially over short term; therefore judge managers over a full market cycle
Sometimes investing for market exposure i.e. “passive beta” is more appropriate than searching for manager skill i.e. “active alpha”
Investment philosophy and process of manager must be understood and believed in
Stability and strength of fund manager/team is important
Access to fund manager/team is crucial – No hidden ‘Bernie Madoff’s
Alignment of interests / stewards of capital
Size is a consideration – in some markets being small and nimble is an advantage
Separate operational due diligence process
Comments