Evaluating Emerging Managers

Best Practices for Evaluating Emerging Managers

Ashton Global's core mission is to identify outstanding emerging managers, which involves significantly more groundwork than choosing among existing funds. One of the reasons for investing in emerging managers is that their returns tend to be higher in the first few years. We make a deliberate effort to find graduate-educated women, minorities, and others with different perspectives who may be capable of generating alpha.

Evaluating Organizational Infrastructure

Although finding managers is crucial, it means nothing without organizations to support them. We look for teams with proven integrity and investment management experience. Team members must have the complementary skills needed to meet diverse challenges. We also look very carefully at the firm's structure and financial stability before making any investments.

In some cases, it is better to provide other forms of support before investing. Although we can help, successful emerging managers must also start with suitable contacts and a strong network that can create value for the investment strategy. 

Making Connections

The most difficult challenge facing emerging managers is finding investors, and Ashton Global has the experience and connections to assist them. There is far more to this process than merely matching funds with potential investors interested in their approaches. It takes time to build influence and connections. Informed investors often need to see an emerging manager's insights and decision process validated by outcomes in real-time.

We provide managers with input on how to improve their presentations and content to meet that need and appeal to specific target markets. We also introduce new investment firms to each other to help them build their networks. 

Optimizing the Investment Thesis

The best emerging managers are the ones who constantly strive to optimize their investment strategies, and we support them in that process. In fact, their ability to adapt to current market conditions is part of why emerging managers are often able to produce higher returns. We provide a sounding board for new ideas, and we can get responses from potential investors early in the decision-making process.

Ashton Global realizes the importance of preserving the uniqueness of new investment strategies. We always work to build distinct investment styles rather than reusing a preexisting mold.

Building Organizations

Another significant challenge occurs when emerging funds start to grow, and organizations become more important. Nearly every emerging manager begins with a relatively small team of people that they already know and trust, but growth requires moving beyond that.

The same methods that we use to find emerging managers can also be used to assist them in finding new team members. The connections we helped them to make with other firms are another asset in building an organization, particularly when staffing back-office positions.

Implementing Best Practices

As an emerging manager builds a fund into a more mature organization, it becomes increasingly vital to establish policies that promote growth and protect investor interests. We share best practices for reporting, annual meetings, and other ways to boost operational efficiency.

Enhancing transparency and establishing the separation of duties are also vital to maintaining accountability and performance as emerging managers expand their operations.

Ashton Global emphasizes investing with emerging managers over the long-term, and that requires consistent involvement. We believe that vigilance is the key to sustaining the returns of emerging managers. Contact us to learn more about our emerging manager platform and the opportunities for new and diverse managers.