Investing with alternative investment managers poses unique challenges.
While there are many thousands of alternative managers in existence, they generally keep low profiles and are prohibited from advertising. While there are published and on-line directories, they do not list all managers, and most such directories have no process in place to verify the accuracy of the information they report on the managers.
Given the wide variety of investment strategies and techniques available to alternative managers, one must be well versed in such trading strategies in order to evaluate a managerís performance. What is a managerís particular edge is his strategy compared to his peers? Is the manager taking unusual risks in order to generate performance? The sophisticated investment techniques used by managers may be unfamiliar to some investors.
PCG DUE DILIGENCE
Unlike regulated investment vehicles, alternative investments require a great deal of due diligence. One should review the offering materials to ensure there are no non-standard provisions. What is the managerís regulatory history? Are there any outstanding lawsuits against the manager? Did he really go to school where he said he did? What do investors say about him? In addition to reviewing a managerís investment merits, one should review the managerís operational/business merits. Has the managerís fund undergone audits by an independent accounting firm? Is the manager using reputable/industry standard service providers? What is the experience of the managerís team? How is the portfolio valued and who is doing the valuation? What type of systems is the manager using? What are the managerís contingency plans? Once one is comfortable with the manager and an investment has been made, one should continue to monitor the manager to ensure that there are no material changes going forward. Are there any new regulatory or legal proceedings against the manager? Has the composition of his staff changed? Has his investment strategy changed (ďstrategy driftĒ)?
Partner Capital introduces emerging and established managers to investors worldwide that are selected based on their reward/risk characteristics and/or offer unique investment opportunities. All managers have undergone thorough due diligence and are monitored periodically to identify changes that could impact their performance.