How to Choose a Money Manager

Before choosing a money manager, we believe investors will be well-served to consider this checklist

Does the strategy suggest the returns were achieved over a substantial period of time? Is there higher risk if debt will be used to achieve these returns?
Investing being a long-term game, is there a focus on robust processes that are replicable?
What does the fund do differently to achieve these returns? Are these strategies unique?
Does the investment strategy give you a view of the likelihood of permanent loss potentially involved? How does this compare to the potential returns and your personal risk appetite?
Are there enough controls to prevent the risk of concentration?

Does management honestly present good news and bad news? Do they selectively report successes and underreport mistakes? Are there any incentives to window-dress results?
Do the funds measure their performance with an unchanging yardstick or does the goal post shift? Is there more focus on absolute performance or relative performance?
Are there distribution or hidden expenses that result in a haircut of your initial investment? How are expenses managed?
Does management have an incentive to invest in affiliated companies? Are there mechanisms to prevent conflicts of interest for management with other funds they are managing?

Does the management fee scheme provide an incentive to maximize returns for your investment or are they indifferent to your returns?
Do the managers eat their own cooking and invest in their managed / recommended funds? Is the extent of the funds significantly above any mandatory investment requirement?
Is the management adequately qualified and experienced? Is this business the core focus for management? Why or why not?

If the returns are very attractive, what measures are taken to ensure that this is not a pyramid scheme? Are there incentives for expansion of investors? Are there discounts for members to bring in other members? During distribution of gains, are there auditing controls to ensure that gains are not paid from funds added by new investors?
What failsafe mechanisms are available to protect the return of your capital should there be an incapacitation or disqualification of the management to run the fund?