Raising these questions at your next fund manager meeting will ensure you fully understand how they plan to achieve your investment objectives

From the pen of Garth Gregory, investment consultant, Mercer Investments.

As an investment consultant at Mercer Investments, much of my time is spent developing relationships with clients, as well as investment managers, analysts, and other professionals tasked with achieving long-term goals.

For many investors, ensuring a fund manager can fulfil what’s being asked of them is an imperative part of the investment process. Yet this can be a daunting task. Many of the clients I work with, from charity board members to superannuation scheme trustees, are eager to engage with managers to become more informed on how they plan to achieve investment objectives, but perhaps don’t hold a wealth of experience in quizzing investment providers.

So, here are my questions to cut through the noise, ensuring you’ll leave your next investment provider meeting feeling informed, confident, and with a deeper relationship with your provider.

1. What is your competitive advantage?

Every investment provider will seek to sell their approach, ethos and strategy as factors that boost their competitive advantage. Slick presentations with colourful graphics can paint an impressive picture, but a fund manager should be able to tell you, in plain English, how they’re different.

A competitive advantage may not always show on a fund’s performance factsheet. Rather, it can often come in the form of small, tangible elements. For example, having an innovative data solution, or the fund manager simply having time to regularly catch up over a coffee, can help keep you informed and in a position to make the correct decisions.

2. What have you got wrong this year?

It’s a fundamental truth in investing that no one gets it right all the time, otherwise, there would be no risk and I’d be out of the job. Owning that risk, and the mistakes that come with it, makes for a personable, reflective and transparent manager – factors that act as the bedrock for a successful working relationship.

Great questions are grounded in context. In this instance, asking the manager to reflect on the past 12 months offers them an opportunity to highlight what they’ve learned from a year of unpredictability and change, and how they can use those lessons going forward.

3. What’s on the horizon that we should be focused on?

On the flip side, an investment or fund manager should be focused on what is yet to come. Asking what factors are particularly relevant to your organisation’s area of expertise offers the opportunity for the manager to flex their expertise in a way that is tailored and accessible to you.

At a time of inflationary pressures, geopolitical tension and economic uncertainty, tapping into your managers’ forward-looking insights can help you plan for, and mitigate risks. Conversely, fund and investment managers love nothing more than talking about the opportunities they’re excited about. Take note of the themes, types of assets and investment horizons, and ask how they relate to current headwinds.


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4. How do I explain this to our stakeholders?


Investment and fund managers often talk in jargon but understanding the core themes and concepts of their approach is a vital piece of information that must be shared with other stakeholders. Regardless of their experience in dealing with financial matters, it’s important to have them on the same page. Ask your manager how best to explain complex approaches to people with limited knowledge of the financial world. It could save you a lot of time and frustration.

5. How well embedded are ESG strategies in your core offering?


Environmental, social and governance (ESG) factors are becoming increasingly central to investment managers’ approaches, while ESG-specific strategies have ballooned in value over recent years. There is a thinking that incorporating ESG considerations can reduce a portfolio’s exposure to risk. Ask your manager what ESG factors go into their decision-making process, and to what extent are they embedded in the fund’s core strategy.

6. What are your net-zero obligations, and how are you monitoring progress?

Increasingly, net zero is forming part of the investment equation. With landmark treaties such as the Paris Agreement having a widespread impact, the transition towards a low-carbon economy is in its tentative early stages. Many banks, financiers and global organisations have made public their net-zero roadmaps, offering tangible evidence of what they aim to achieve, and how they’re setting about achieving it. Ask your manager if they have a net-zero roadmap in place, or when they expect to produce one.

7. What risks are you currently hedging against?

Amid current economic uncertainties, managers are utilising various tools and mechanisms to mitigate risks. This can come in the form of economic risks, like inflation, or more material risks, such as the climate transition. Currently, there is a broad shift in allocations towards assets that can help provide some inflation protection, such as real estate and commodities, but managers will be aware of other risks explicit to their holdings.

Those are my top seven must-ask questions. But remember, you can never ask enough questions. If there’s one thing I know about fund and investment managers, it’s that they really like to talk about their work. Indulging them may prove pivotal to understanding how they’re helping you achieve your objectives.

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