With thousands of investment managers registered with the Securities and Exchange Commission, finding the manager best suited to your fund may seem like an overwhelming task. DeMarche has conducted hundreds of manager searches for institutional funds throughout the country, earning a reputation as the most knowledgeable search and selection firm in the industry.
Our in-depth approach to conducting manager searches is designed to identify highly qualified managers that are well suited to meet your plan’s needs and ensure that you are better informed.
DeMarche’s manager research and search activity is a primary component of added value for our clients. The process is facilitated through our proprietary open-architecture database of investment managers, started long before any national or subscription database became available. To be included in our database, a manager must complete a DeMarche Manager questionnaire, provide quarterly composite performance results, and agree to notify us immediately in writing when significant changes occur within their firm. The DeMarche database presently includes over 2,600 managers and 9,000 products.
DeMarche’s Manager Review Committee (MARC) leads our manager search and ongoing due diligence process. Composed of the firm’s most experienced consultants, MARC analyzes managers much in the same way a manager’s investment committee analyzes securities. MARC meets weekly to evaluate managers, assigning them to proprietary peer universes based upon portfolio characteristics.
DeMarche’s research professionals and consultants perform on-site due diligence on a regular basis. Our consultants and manager research group assesses investment managers through a number of qualitative and quantitative measures. Managers are assessed through a profiling process, which includes the completion of asset class-specific due diligence questionnaires and interviews with key investment management personnel. The qualitative review facilitates an understanding of the investment manager’s organization, personnel, investment strategy, and process. We’re most often looking for continuity of people, process, and results.
Through a robust database and process of manager research, due diligence and ongoing monitoring, DeMarche has been able to provide proof of added value for clients. Our manager search process can be executed through a traditional search process (semi-finals, finals, manager selection) or via discretionary search, which consolidates the time necessary for manager implementation.
Manager Search & Selection is one of the principal ways we add value to your investment process. We assess investment managers through a number of qualitative and quantitative measures, beginning with a qualitative review based on our investment manager questionnaire and profiling process. This process includes the completion of asset class specific due diligence questionnaires, interviews with key investment management personnel and on-site visits, as appropriate.
Qualitatively, we focus on a number of key ‘Leading Indicators of Performance’ when placing a firm on our approved list. This includes firm-wide factors as well as investment product-specific characteristics such as portfolio managers, philosophy and process. Quantitatively, we evaluate managers based upon performance versus peers, absolute and relative return versus broad market and style specific investment objectives, aggressive/defensive performance orientation relative to a proprietary scoring system, Sharpe based performance style analysis, and security-level holdings review.
Portfolio holdings are processed through our proprietary Fund Diversification Monitor, which evaluates securities by aggressive/defensive, growth/value, market cap, Price-to-Earnings, Price-to-Book, and sector orientation to identify portfolio management style and performance attribution.
Through our ongoing research, over the course of our history, we have developed a suite of proprietary Factor Models. Together, these models more accurately measure market inefficiencies, portfolio risk exposures, and firm-specific risk exposure than traditional models. As a result, they produce accurate expected return calculations for each manager considered. We seek to better explain within which market environment investment managers will be expected to best perform; this is extremely valuable when evaluating manager performance in light of capital market conditions and market leadership (style or market cap size, for example). This process helps us partner with the best investment manager that fits your investment risk and return goals and objectives. In summary, our Factor Models help us monitor investment managers in three ways:
- Performance Projections – You can actually project a manager’s relative performance and the overall relative performance of your fund.
- Manager Search – Expected return analysis provides better insights for evaluating a prospective manager’s security-selection skills.
- Performance Evaluation – Similar techniques enable you to evaluate more precisely a manager’s ability to select securities with the highest expected return.
Upon completion of all qualitative and quantitative due diligence steps, we draft a profile of the investment management strategy for review by the Manager Review Committee (MARC). With over 150 years of combined investment experience, MARC is made up of senior consultants and portfolio managers that serve as the internal due diligence review board.
During investment strategy review meetings, MARC reviews the strategy profile accompanied by performance and holdings analytics to assess any due diligence concerns and opine on the appropriateness of use by clients. After the strategy has been reviewed, ongoing due diligence is maintained with periodic profile updates and continued monitoring of noteworthy, strategy-related news.
We build and maintain ongoing relationships with client-related investment managers, opening clear lines of communication to convey any developments that would impact our opinion of an investment management firm or specific investment strategy. As part of our ongoing due diligence, we perform on-site due diligence of managers on an ongoing basis.