Background
Some family offices looking to diversify their investment portfolios, often wish to explore opportunities with emerging managers in alternative investment strategies such as Private Equity, Venture Capital, Commodity Trading Advisors, Hedged Credit, Private Credit, Special Situations, and Equity Long-Short strategies. Recognizing the challenges in identifying and evaluating such managers, Family Offices turn to WVP for our expertise.
Worth Venture Partners' Pre-Vetted Manager Selection
WVP maintains a curated roster of pre-vetted emerging managers who have undergone extensive evaluation. The firm’s commitment to due diligence keeps it focused on sourcing managers meeting stringent criteria, which are then presented to clients.
The Assessment and Due Diligence Process
WVP's due diligence process involves several key stages:
1. Initial Identification and Screening
WVP monitors the alternative investment market to identify emerging managers who demonstrate exceptional potential. This involves:
- Market Surveillance: Keeping abreast of industry developments and new fund launches.
- Networking: Leveraging relationships with industry professionals, analysts, and academic institutions.
- Screening Criteria: Careful review of performance history, strategy viability, and compliance records.
2. Quantitative Analysis
Once potential managers are identified, WVP generally conducts an in-depth quantitative analysis when relevant:
- Performance Metrics: Evaluating historical returns, volatility, and risk-adjusted performance indicators.
- Comparative Analysis: Benchmarking against industry standards and peer groups.
3. Qualitative Assessment
Understanding the human element behind investment strategies is crucial:
- Management Evaluation: Analyzing the background, expertise, and track record of key personnel.
- Strategic Vision: Assessing the clarity and uniqueness of the investment thesis.
- Organizational Culture: Observing team dynamics and decision-making processes.
4. Operational Due Diligence
Operational soundness is also as crucial as investment acumen:
- Infrastructure Review: Evaluating the robustness of operational systems and technology platforms.
- Compliance and Governance: Examining adherence to regulatory standards and ethical practices.
- Service Providers: Reviewing the quality of third-party relationships, including auditors and custodians.
5. On-Site Visits
WVP believes in the value of face-to-face interactions:
- Facility Inspection: When practicable, visiting the manager's offices to observe operations firsthand.
- Interactive Sessions: Engaging in detailed discussions about strategy execution and risk management.
- Team Engagement: Meeting with various team members to gauge expertise and cohesion.
6. Reference Checks of Key Personnel
Verifying credibility through external sources:
- Professional References: Contacting, for example, previous employers, partners, and industry contacts.
- Investor Feedback: Gathering, when available, insights from current or past investors in the manager's funds.
- Character Assessment: Conducting background checks for any legal or regulatory issues.
7. Legal Review
Supporting legal robustness:
- Documentation Analysis: Reviewing offering memorandums, partnership agreements, and compliance manuals.
- Regulatory Compliance: Confirming registration and reporting compliance with relevant authorities.
Manager Profile Build
After completing the due diligence process, WVP will compile the necessary information and data for emerging managers across the desired strategies. Each manager profile includes:
- Executive Summary: An overview of the manager's strategy and competitive edge.
- Due Diligence Report: Detailed findings from the quantitative and qualitative assessments.
Investment Decision and Outcome
Through our thorough vetting process, we partner with our Family Office clients to help them access investments that seek to lead to:
- Portfolio Diversification: Enhancing exposure to alternative strategies aiming at low correlation with traditional markets.
- Anticipation of Superior Returns: Provide returns that exceed industry benchmarks.
- Strategic Partnerships: Establishing long-term relationships with promising managers poised for growth.
Continuous Monitoring and Support
WVP's role extends beyond the initial investment:
- Performance Monitoring: Regular updates on manager performance and strategy adherence.
- Ongoing Due Diligence: Periodic reassessments to help maintain continued compliance and operational integrity.
- Market Insights: Providing our clients with updates on industry trends and potential impacts on investments.
Conclusion
Through our meticulous assessment and due diligence processes, Worth Venture Partners seeks to enable Family Offices to confidently access and invest in pre-vetted emerging managers across various alternative investment strategies. WVP's approach aims to ensure that Family Offices are able to diversify their portfolio with high-potential opportunities while mitigating the risks typically associated with emerging managers.
Note: The tax, financial, and legal aspects of an investment in PPVAs, PPLIs or IDFs are complicated. Nothing herein is or should be misconstrued as legal or tax advice. This summary is included for general information only. Each person considering such an investment should consult with and rely solely upon its own tax, financial and legal advisors to understand fully the possible federal income and other tax consequences. Investment in alternatives, including hedge funds and private equity, can introduce increased risk of investment losses.
