Manager Research

Algonquin relies on its Investment Committee’s institutional research capabilities to identify and select investment managers for its clients.  The firm conducts its own research resulting in a proprietary platform that includes a focused roster of managers across a broad range of asset classes and strategies.  The manager platform includes only those managers Algonquin believes to be well suited for its client base and best-of-breed relative to their peers.

Initially, investment managers made available to Algonquin’s clients go through a disciplined manager review process.  The firm strongly believes that the disciplined process it employs is likely to have repeatable success in identifying and retaining best-of-breed managers.

When reviewing new managers, the critical steps in the Algonquin manager research process are:

1. Sourcing

Investment managers are sourced primarily through the depth of contacts the Algonquin investment professionals have in the investment management industry.  Algonquin places a high degree of value in sourcing managers through investment professionals whose judgment the firm has grown to know and trust. 

2. Quantitative Analysis

Once a new investment management candidate has been sourced, the firm’s initial analysis includes a thorough quantitative review of the strategy by one of the firm’s analysts.  The analyst will review characteristics that include historical risk-adjusted return in relation to a relevant benchmark and peer groups.  Sophisticated risk measures are also reviewed.  These can include measures such as alpha, beta, Sharpe Ratios and drawdown analyses to help ascertain a manager’s ability to navigate a variety of market environments.  If the candidate possesses characteristics that Algonquin feels meets its best-in-breed definition, it will be subject to further review.  Given the breadth of the Algonquin quantitative analysis, few managers make it past this first step. 

3. Qualitative Analysis

If a manager looks appealing on a quantitative basis, Algonquin will continue its review by focusing on qualitative characteristics to better understand the manager’s organization and investment process.  A qualitative review of the factors such as ownership structure, depth of staff, assets under management and growth trends in the firm's asset base are considered.  The consistency of the firm’s investment process, trading environment and risk management practices are critical.  The manager’s investment terms, prime broker relationships, operations and administrative policies, regulatory filings and compliance culture are reviewed. 

4.  Due Diligence Questionnaire

The information gathered during the first three steps of the manager selection process is captured in Algonquin’s proprietary Due Diligence questionnaire.  This questionnaire is then reviewed along with other relevant manager-related information during Algonquin’s Investment Committee meetings. 

5. Investment Committee Final Review

A completed Due Diligence report is prepared by the lead analyst assigned to the manager to document each of the above-described activities.  At this point, Algonquin’s Investment Committee conducts its Final Review to decide whether to make the manager and its investment strategy available to the firm’s clients.

6. Manager Monitoring

The Manager Research process does not end with the Investment Committee’s Final Review.  At this point the manager will be made available to Algonquin clients.  Through regular conference calls and face to face meetings each investment manager selected by Algonquin is periodically reviewed to confirm that it continues to possess the attributes that enabled it to pass the firm’s initial manager review.  Items such as organizational changes, investment process changes, style drift, subpar performance or a failure to meet Algonquin’s expectations are among the critical factors reviewed.  If Algonquin loses confidence in the manager’s ability to perform as it had in the past, it will recommend that clients replace the manager with a suitable alternative.

Portfolio Construction is a critical part of the Algonquin Investment Process.  The Investment Committee’s tactical allocation insights and Manager Research process are core “difference-making” tangibles for Algonquin’s clients.

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