In-depth due diligence, a basic requirement for long term sustainability

Over the past few weeks, a spotlight has been shone on interesting practises adopted by Investment Managers. We all know in the investment management business trust is everything, but at times, the desire to be creative results in investment decisions and practices that are questionable.

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26 Jun 2019

Over the past few weeks, a spotlight has been shone on interesting practises adopted by Investment Managers. We all know in the investment management business trust is everything, but at times, the desire to be creative results in investment decisions and practices that are questionable.

At the same time, Investment Managers who have been in the industry for an extended period of time, like Woodford, seem to attract investors without the need to perform quality Due Diligence (DD) on the Investment Managers they work with and their processes, as “surely” an investment manager with billions of $$’s under management must be legitimate.

With H20 coming under similar scrutiny with certain funds holding excessive levels of illiquid positions and the oversight being undertaken by Natixis, I thought it prudent to reiterate our business model.

EI Sturdza Strategic Management Limited (‘Eric Sturdza Investments’) appoints 3rd party investment advisers. Our model frees the investment advisers from the burden of administration so that they can focus purely on investments and managing investors’ money.

Eric Sturdza Investments takes its responsibilities seriously and will conduct initial DD on any Investment Adviser it is looking to on-board. Annual on-site visits are conducted to ensure that the Investment Advisers have the required policies and procedures in place, they understand their responsibilities in connection with their appointment and that they adhere to UCITS regulations. But we do not stop there. Eric Sturdza Investments will review each fund on a daily basis to ensure that there are no investment breaches, that they are upholding the investment objective and that there is no investment management style drift. We have a hands on approach and will research any new holding to ensure that we understand what it is and how it is contributing to the investment strategy of the funds we manage and are appropriate to our funds in light of their liquidity requirements. We independently perform our own risk assessment on the funds to monitor the investment advisers’ performance.

We understand the desire to draw parallels between business models, and while on the surface they might appear to be similar, Eric Sturdza Investments is involved in every aspect of the funds we manufacture and have full and transparent oversight over our investment advisors.

Should you wish to receive any additional information in this regard please contact info@ericsturdza.com