The Beige BookAugust 24, 2018
Investor Series – ParentSeptember 24, 2018
This third installment starts us down the path of the qualitative side of our analysis. Remember back to the introduction that this process is a mixture of art and science. This is where the art comes in. This portion answers the questions surrounding who are the actual fund managers themselves? Do they have a strong team around them for support? When we look at who is managing the strategy and direction of the fund, we like to see things that paint the picture of competency and effective management. Statistics like how long they’ve been in the industry, how long they’ve been at the parent company (next week’s “P” hint hint), and how long they’ve been a fund manager form the basis of this section. What we like to see is consistency in the fund’s management team because if it’s a revolving door of managers coming and going, this can lead to negative effects on returns due to strategy that’s constantly changing. Strong manager tenure is generally seen as positive and it’s also generally seen as positive if the managers are groomed within the same firm before becoming part of the management team because of the advantage of having a view consistent with that of the parent. This is where the supporting cast comes in. A fund that has a “deep bench” is also seen as a plus because this means they have a lot of resources at their disposal. This isn’t crucial but, one of the more interesting supplementary questions in this section is does the fund manager invest in his or her own fund they manage? If they do it’s obviously seen as a positive for good reason because it means they’re putting their money where their mouth is… and to be frank, that’s probably how it should be too.
Griffin Sheehy, Financial Analyst