LCG believes that it is imperative to have a thorough understanding of each client’s unique return and risk objectives in order to source the most appropriate investment managers for their portfolio. As such, we do not maintain an “approved” list of investment strategies because we believe this practice leads to one-size-fits-all portfolios. Investment manager searches are conducted using a customized process that emphasizes both quantitative and qualitative analytics. Importantly, the quantitative and qualitative attributes of an investment strategy must marry in order to warrant consideration.
From a quantitative perspective, LCG’s proprietary systems allow our team to screen for investment managers using the risk and return metrics that are relevant to each specific client. In all cases, we focus on net-of-fee results, as we believe this is the way to determine a strategy’s true value-add over time. LCG’s robust, proprietary manager database serves as a powerful tool when comparing and contrasting investment strategies.
The qualitative component of LCG’s manager search process is designed to confirm or debunk whether an investment manager’s historic success is repeatable and likely to succeed in the future. In our experience, there are no shortcuts to thorough analysis in this area, and LCG’s process emphasizes meeting with key investment professionals, often in their offices. For alternative investments, our suitability process is structured to identify undue business and operational risks that are often inherent in such strategies. Additionally, LCG recommends small/emerging and/or minority-/women-owned investment managers in both traditional and alternative asset classes.
LCG believes that experience is critical to assessing any investment, which is why investment manager research at the firm is led by experienced professionals. Importantly, our due diligence process does not cease once an investment manager is hired. LCG’s monitoring process is ongoing and is integral to our manager due diligence efforts.