Long-term verifiable return >6% p.a. (liquid) or 9% p.a. (illiquid) with an attractive return/drawdown profile (2:1 excellent) and/or significant positive ESG impact.

Outstanding drawdown profile relative to indices and peer group and relative to returns. Inappropriate concentration risk or other tail risks can be critical.

Typically >7 years verifiable track record in current fund set-up. No backtesting. Ideally, track record dates back before the 2008 financial crisis.

Exceptionally attractive environment in terms of downside (margin of safety) and/or return relative to the performance drivers of the strategy over many years.

Comprehensibility and assessability of value drivers and risks of the strategy.

Asset size is appropriate for the strategy and the team. Preferred is slow and controlled growth, e.g. through soft or hard closes. Consistency in strategy (no strategy changes).

Stability of the core team over the relevant period. Changes of portfolio manager or CIO is critical.

Stable core team over many years with an age structure that allows for long-term collaboration. Key people strongly committed to the fund.

Significant team investment, >5% of fund volume is outstanding, <1% is problematic. Variable remuneration should make up majority of total remuneration. Performance-based carry allocation in the team.

Fund terms appropriate for the strategy. Appropriate ratio of fees to active value creation in absolute and relative terms.

Good access to key personnel and team during due diligence. High level of portfolio transparency.

Avoidance of risks that can lead to significant losses. Indicative risks are very high portfolio concentration, excessive use of leverage or derivatives. Risks must be presented appropriately (risk management system).

Preference is given to managers with one flagship strategy.

ESG rating is assessed separately (see ESG section on the website). We look at the actively generated ESG delta and the manager’s focus on ESG issues.

References are an important part of due diligence. The results are incorporated into the grid.

Characteristics are typically outperformance, drawdown profile, team stability, transparency, ESG, compared against peer funds worldwide regardless of the fund structure or origin of the manager.