EnnisKnupp has a team of 23 individuals dedicated to evaluating publicly traded and traditional managers and helping clients maximize their probability of adding value with active management. In addition, the firm has over 30 professionals dedicated to alternatives manager selection, including private equity, real estate, and opportunistic strategies. The team conducts ongoing due diligence on existing client managers and actively seeks new managers that may have the ability to add value relative to client benchmarks.
Our formal approach to manager evaluation is based upon our Investment Manager Rating System (IMRS) which quantifies the elements associated with a manager’s success. We tend to deemphasize a firm’s past performance and instead focus on those factors that tend to impact future performance, including fit with client mandate, trading expertise and costs, organizational stability, ownership, perceived skill, and fees.
Our system employs three sets of factors in evaluating manager products:
- Performance-related
- Product-related
- Organizational-related
Each set includes two or more factors, for a total of eight, and most involve multiple sub-factors. Using the system to evaluate a particular investment product or strategy, we assign a point score for each factor. This represents our assessment of how considerations for that factor bear on the manager’s performance potential. In addition, we review each of our clients’ investment manager’s compliance with their investment guidelines.
We monitor investment managers on two levels. The first, and most rigorous, involves monitoring managers that currently manage assets for our clients. We conduct a quarterly analysis of performance and portfolio characteristics; have personal meetings at least annually; and participate in numerous conference calls throughout the year.
Our second level involves continuously monitoring investment managers of interest that do not currently manage assets for our clients through meetings, conversations, routine correspondence, and through various media sources. When we identify an investment manager that could be a good fit with a client’s strategy, we relay that information as quickly as possible.