Manager Due Diligence
Purpose Driven, Process Oriented
In addition to our high-quality proprietary equity and fixed-income investment strategies, KAR also utilizes external investment managers to provide our clients with what we believe are the best investment opportunities available in the marketplace. Our process for selecting these managers involves a rigorous quantitative and qualitative approach to identify managers that we consider the best-of-breed in their specific asset class.
Our goal in the manager selection process is to identify truly competent investment teams, with a consistent strategy, strong performance track record and operational integrity. This process involves a multi-stage screening process and a comprehensive due diligence process, including in-depth interviews and onsite visits.
Identify Investment Mandate
We target our manager search for a specific investment mandate. While all available managers are considered, the nature of the mandate quickly narrows down the number of options.
Conduct Preliminary Screens
Performance screens are the starting point in the research process. We consider strategies that have outperformed their peer group and benchmarks and rank them based upon risk-adjusted returns. Important criteria are consistency of performance relative to the peer group and benchmark, special factors that impacted performance that may not be repeatable, and the level of assets on which the performance track record was based.
Perform In-Depth Due Diligence
Each firm that passes the initial screens is sent a comprehensive due diligence questionnaire. The questionnaire addresses the firm’s investment philosophy and approach, risk management, personnel, operations, corporate history and legal and compliance issues.
After reviewing the responses, an in-depth interview and/or onsite visit is conducted to develop the qualitative assessment of the manager’s skill and discipline.
Utilizing the qualitative assessment and analytical data, we determine the quality of the organization, the personnel and what we believe is the manager’s “edge” and if it is repeatable.
Approve for Purchase
KAR’s Investment Committee reviews all available data and makes the final decision if a manager should be included on the firm’s investment platform. Once approved, there is ongoing due diligence to insure that a manager continues to meet our standards. We utilize a proprietary database to document all initial and ongoing due diligence.