The mandate sets the boundaries
The investment mandate is the starting point. It defines the portfolio's purpose and the boundaries within which the manager acts. Investors should know what the manager may buy and which decisions require a different approval.
A portfolio is a series of connected decisions
Selecting an asset is only one part of the job. The manager also considers concentration, liquidity, pricing and the effect of the investment on the rest of the portfolio. A strong opportunity can still be a poor fit for an existing mandate.
Oversight extends beyond asset selection
Administration, custody, valuation and specialist advice may involve external providers. The investor should understand their roles and how the manager reviews the information and services they supply.
Questions that reveal the process
Useful questions include how decisions are challenged, what information investors receive and how a material problem is communicated. The answers reveal more about management than a list of attractive opportunities.
- Read the mandate before comparing opportunities.
- Understand oversight and service provider responsibilities.
- Ask how a change or problem would be communicated.
This perspective is general information. Consider the relevant documents and your circumstances before making an investment or finance decision.