Before you take your investment show on the road, take a moment to review these four essential Ps: People, Philosophy, Process, and Performance. If you have evaluated the first three (People, Philosophy, Process) and believe you've made them the best they can be, the fourth (Performance) should naturally follow--not every week, quarter, or even year--but over time. Can you think of other Ps? Let's start a dialogue!
Practice, Practice, Practice
July 29, 2019
You've redone your pitch book. Have you tried it out on colleagues who will give you honest feedback? Let's face it. Most people will just say, "That looks great." You're left with trying to read their intonation and body language. That's not an effective way to improve your delivery, either written or oral. Perhaps you should consider professional coaching. An experienced coach will listen to your delivery and give you an honest response to what works and what doesn't work. He or she will ask probing questions in a supportive way. We can help you hone your message and produce a quality product that will give you confidence in any tough meeting.
Let Volatility Work for You
January 2, 2019
Let's face it: few investment managers like volatility. When faced with a period of ups and downs in the market, use this time to review your strategy. Are you communicating it properly with your clients? Dig deep into your results. Are they what you expect in a volatile environment? If not, get together with your team and make sure you're all on the same page. You can't control the market, but you can control the consistency of your execution.
September 27, 2018
Institutional clients care about the entire investment team, not just a designated portfolio manager. They will ask about many aspects of your team, including its depth, the experience of the team members, how they contribute to the decision-making process, and how they are compensated. Being able to demonstrate that team members' work is respected may be critical to the hiring decision. You may want to showcase team members when prospective clients visit your offices so they can see for themselves where they fit into your organization. Think carefully about team interactions as well as individual roles in decision-making and how both can be improved BEFORE you receive feedback that suggests there's a gap in your investment process.
Get Active! Know Your Number
June 14, 2018
There’s been a lot of talk about active share recently, and managers should be prepared to answer the question, “What’s your active share?” Active share is a measure of how a portfolio differs from its benchmark and what proportion of the portfolio is driving performance because the proportion that is identical to the benchmark is essentially passive. Studies have shown a positive relationship between high active share and outperformance. That’s why prospective clients want to know your number! But the number alone doesn’t tell you everything. It’s important to know your number vs. peers. An active share of 85% may sound high to you, but if you’re a small cap manager, it isn’t all that high. The breadth of an index matters also. Because a small cap benchmark is broader than a large cap benchmark, actively managed small cap portfolios have a naturally higher active share. Active share is not a useful measure of risk and should not be discussed in that context. It’s a way of assessing the possibility of a portfolio’s outperformance.
Institutional Roadmap: The Basics
April 10, 2018
You’ve spent years developing your investment process and building your organization. You have a number of satisfied clients, and you’re ready for the big leagues. How do you break into the large consulting firms? It isn’t easy. A manager research professional may meet with a hundred or more firms a year, and he or she may only be looking for one additional strategy to add to the lineup. Why should they choose you? You need to develop a presentation (both written and oral) that answers the right questions. Consulting firms are ultimately looking for investment strategies they think will add value, and it’s up to the investment management firm to convince them that this strategy will make money for their clients. They are looking for repeatability and consistency in process. This means that you must have a clearly stated investment philosophy and be able to explain how it translates into making money for clients. It isn't enough to have good performance either. You must be able to set your performance in historical context. CSC can help you navigate this highway!
Is Quality a Differentiator?
March 15, 2018
Many of the managers I speak to highlight quality in their presentation materials. Identifying quality is often an important part of the investment process, but is it a differentiator? Sadly, no. In the dozen years I worked at Cambridge Associates, I met with hundreds of managers, and I can only recall two for whom quality wasn't--in one way or another--a component of the investment process.