THE SUSSEX PARTNERS FUND SELECTION PROCESS FLOW
The performance and value a hedge fund brings to a portfolio stems from the manager’s specific skill set and area of expertise. These factors determine their ability to create returns from multiple, often uncorrelated opportunities
There is a wide dispersion of returns across and within strategy types, making manager selection crucial. Even if the wrong strategy call is made by an investor, a skilled hedge fund manager can effectively protect capital or even produce positive returns in an adverse environment
Fund selection is crucial given the importance of manager skill in generating returns and alpha.
Research, screening and monitoring
In-depth research is a cornerstone of our process, involving analysis and monitoring over a sustained period of time.
Global onsite visits are conducted with each manager to verify the fund’s infrastructure, investment team, back office and systems.
Due diligence questionnaires
Questionnaires are tailored according to specific strategies and include an emphasis on operational issues.
Operational risk assessment
Risk management and internal controls
Review of portfolio liquidity
Portfolio pricing: valuation policy, pricing consistency and independence
Review of audited financials and verification by the auditors
Background and reference checks on key personnel
Flow and consistency of information provided by the fund
Review of offering documents and marketing materials, regulatory checks and internal assessment of the strategy’s latent legal risk.
Monthly update calls/ meetings, periodic portfolio reviews and monthly/ quarterly portfolio transparency.