We believe that, generally, firms that are employee-owned with investment staff ownership are the best structured to ensure that the interests of investors and employees are aligned. However, within larger organisations, selected teams can also deliver results in accordance with our expectations.
We believe investment talent is defined as a superior capability of individuals to gather and synthesise public information, correctly anticipate market movements and express their conviction via meaningful active exposures. Detecting investment talent is more art than science and a deep knowledge of the technicalities of asset management, coupled with experience, are the necessary prerequisites to perform strategy selection.
We believe portfolio managers need to be supported by sufficient analytical resources (macro, equity) to effectively implement their investment process (i.e. to facilitate risk taking and monitoring of investment cases).
We prefer firms that implement compensation policies for investment professionals that are in line with our performance objectives. Bonus incentives based on rolling 3-year performance are from our perspective aligned with our investment horizon. We favour organisations where portfolio managers have ownership of the firm.
Resources: We will favour firms that specialise in a single or a limited number of investment strategies or providing the appropriate dedicated resources to specific investment teams.
Firm Assets: the ultimate capacity of any product is determined by the product’s asset class, construction and style. We appreciate managers who express a clear willingness to restrict their product capacity in order to preserve performance consistency. We use Liquidity Analysis to test fund managers’ theses on product capacity.