Adding a Strong Investment Manager Furthers the Objectives of Family Offices and Endowment Funds
Value chain logic shows core analytical activities lead to key results.
In order to capture 1% improvement opportunities, we place an emphasis on doing little things right.
“Treat growth … as a science, not an art form. Follow-up with same kind of rigor at your operations management”
– RAM CHARAN, HARVARD BUSINESS SCHOOL
There’s a lot going on within markets and family offices. Adding more talent and analytical bandwidth can cut through complexity and meet key objectives.
ERG’s manager selection makes a big difference. Yale states that manager selection accounts for 80% of the difference between their top 1% performance and the average university endowment performance.
The Value Chain diagram shows that core analytical activities lead to key group results. The diagram shows it is imperative to have people close to you who can source good ideas, screen for the right information, organize the information into reports, and conduct the manager evaluation/selection processes. Adding high-quality managers translates into good risk-adjusted returns for the fund. It also frees up time and energy for everyone else in the fund. With additional time and energy, there is a higher probability for dramatic client growth for the fund and enhanced performance in the leader‘s primary business.
It is also imperative to conduct foundational asset class research in equities, fixed income, hedge funds, private equity, real estate investment trusts, among other areas in order to invest at sensible discount valuations.