Asset Alliance seeks to allocate to managers that have extensive investment experience, employ well-developed investment strategies, have in place strong risk management controls, strong internal operational controls, and significant personal investment in the funds that they manage. Our focus is on managers who are at an inflection point in their growth and who will thus provide the greatest upside potential.
The fund selection process starts by identifying the universe of emerging managers. Sourcing of potential managers can be made by all members of Asset Alliance through active contacts with prime brokers, referrals from other industry contacts and third party marketing companies, attendance at conferences and active market searches of attractive strategies.
Manager selection criteria
The criteria for investment in managers are set by an Investment Committee and a Structuring Committee comprised of senior members of the firm. These criteria are reviewed from time to time by both committees.
In general, successful investment candidates will have most, if not all, of the following characteristics:
1. Longer than one year track record
2. More than $25 million of AUM
3. Understandable and scalable hedge fund strategy
4. Attractive risk/return or substantially non-correlated return profile
5. Significant market interest in the strategy
6. Experienced management
7. Marketable team and process
8. Clear background checks
9. Fit with the Fund’s existing managers
10. Manager’s full cooperation to market the fund to potential investors
Our research team recognizes the importance of both quantitative and qualitative factors in the investment decision process. We will utilize a range of quantitative analytical methods and consider a number of qualitative factors. Examples of these include:
– Annualized return since inception;
– Annualized volatility since inception;
– Sharpe ratio since inception;
– History of annualized return since inception;
– History of annualized volatility since inception;
– History of Sharpe Ratio since inception
– Maximum drawdown
– Pedigree of the investment manager;
– Soundness of investment process;
– Strength of the Investment Team;
– Manager transparency;
– Fund terms;
– Operational best practices;
– Personal investment in the fund
Through this process, Asset Alliance will seek to invest in or affiliate with managers who have the greatest potential to produce returns for our investors in a broad range of market environments.