Manager Selection

“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