"We do not invest in Funds - We invest in Fund Managers"

A fund's historical performance data is ill-suited as a basis for making robust forecasts. Such performance frequently bears little or no relation to future performance, particularly when there is a change of fund manager. To understand how success has been achieved and whether it can be replicated over time, it is essential to fundamentally analysis the main factor governing future performance - the fund manager and his investment philosophy.

With this in mind, SAUREN trusts in its unique investment philosophy since 1994: "We do not invest in Funds - We invest in Fund Managers". Each year over 350 interviews are held with fund managers, and their skills are assessed using the experience gained from over 5,000 such interviews. This qualitative assessment of a fund manager's experience, philosophy and strategy is used to put together a detailed profile of each manager including a skills evaluation.

Such a manager-based approach is both innovative and proven in equal measure. The SAUREN Group has successfully pursued this investment philosophy in managing its funds of funds for more than a decade. The performance achieved (see outperformance table) shows that fund manager-based analysis pays off across all investment segments and strategies.

In addition, the negative impact of rising assets under management controlled by the fund manager are continually monitored and interpreted, forming a key part of the analysis. Possible restrictions within the investment universe due to assets under management and the impact on the implementation of investment ideas are taken into account. How well a fund manager can convert his expertise and philosophy into performance depends to a large extent on the size of a fund's assets. The smaller the assets under management, the more flexible a manager can be in implementing his decisions and the greater the opportunities to outperform the relevant market index.

Successful fund managers are particularly able to implement investment ideas without restrictions when assets under management are low in the initial phase of a fund's life, and thus achieve higher-than-average returns. This is the time when fund manager-based analysis reveals its full potential, whereas most quantitative processes are only able to grab a fund once it has acquired a three-year track record. Promising funds can therefore be selected at an early stage based on manager assessments well before their potential has been identified by the market.