It is important to fully understand the fund management firm that will be managing the fund, to explore its history, how it has evolved over time and how the current fund and team managing it have developed. Get a sense of how stable the organisation is, how well the team work together and what resources are dedicated to running the fund, including any relevant people ‘on the ground’ where they are investing. With that, assess any key personnel risk.
Fund management firms have different approaches to investing, so an investor needs to understand the business model, assess how this has delivered returns for investors in the past, whether it was relevant to this strategy and any lessons learnt from any previously missed targets. Finally, the investor must be comfortable the fund management firm remains financially stable. Listed below are a set of questions that should help draw out this information:
