How we prepare a manager for an investment committee

An institutional allocator does not commit on a meeting alone. A fund that interests the allocator's staff is written up and taken to an investment committee, usually without the manager in the room. The staff member who presents it has to answer the committee's questions on the manager's behalf.

That shapes how we prepare a mandate. The aim is to give the people inside the allocator what they need to recommend the fund, in a form they can carry into the committee themselves. Our guide "What an investment committee asks before it commits" sets out the six questions that come up in most reviews. This piece describes how we prepare a manager to answer them.

Seeing the raise as the committee will

Our senior team includes people who have sat on the allocator side. David Hunter, our Senior Advisor, spent nearly four decades in institutional capital and served as Executive Director and Chief Investment Officer of two US public pension systems, the Texas Municipal Retirement System and the North Dakota Retirement and Investment Office. That experience informs how we read a manager's materials. We read them as a committee reads them.

In practice, our senior team reviews the deck, the data room, the track record and the terms before any allocator sees the raise, and tells the manager what we would change. This happens at the Positioning stage of every mandate, after senior review and before outreach.

The materials

The deck. A committee member reading a fund write-up wants to know quickly what the strategy is and why it belongs in the portfolio now. A deck that takes several pages to reach those points makes the staff member's task harder. We work with the manager to put the case at the front, in plain terms, and to remove anything that a committee will not use.

The track record. Committees separate realised from unrealised results and ask who in the current team was responsible for each. We make sure the record is presented at deal level, with attribution, and that the figures in the deck reconcile with those in the data room. An inconsistency between the two is one of the quickest ways to lose a committee's confidence.

The data room. Diligence is easier to sustain when the allocator can find what it needs without asking. The data room should be complete before the first meeting and consistent with what the deck says.

The terms. Fees, carried interest, the hurdle, the general partner commitment and governance are compared against the market for the strategy. Where a term is likely to draw a question, we raise it with the manager before an allocator does, so that it is either adjusted or explained.

The manager is rarely in the room when the committee decides. The materials have to speak for the fund.

The meetings

We prepare every investor meeting with the manager and attend the ones that decide the outcome. Preparation means knowing which of the six committee questions this allocator is likely to press hardest, given its portfolio and its mandate. A pension fund cutting its real estate range will approach a real estate manager differently from one that is adding to it. A family office investing directly will test sourcing claims more closely than one that only invests through funds.

The manager goes into each meeting knowing where the questions are likely to come from, and with the evidence for each answer in hand.

Diligence, as it arrives

Once an allocator is in diligence, the pace of answers matters. A request that sits for a week signals how the manager will treat investors after the commitment. We handle diligence questions as they arrive, so that momentum holds from the first meeting to the commitment. Where a question reveals a gap in the materials, the gap is closed for every allocator in the process.

Why we do it before the market

No investor sees a raise until the materials and terms are ready for a committee. That is one of the principles we apply to every mandate. The first impression an allocator forms of a fund is hard to change, and a manager seldom gets a second first meeting with the same institution. Preparation done after the market has seen the raise is preparation done too late for the allocators who saw it first.

What a manager can expect

A manager working with us will be asked the committee's questions by us before any allocator asks them. The answers will be written into the materials and carried into each meeting. By the time an allocator's staff take the fund to committee, they should have what they need to present it well.

For information only. The questions an investment committee asks reflect general practice among institutional investors and vary between allocators. Nothing here constitutes an offer or solicitation to buy or sell any security.