Accurate due diligence for Gestielle’s Anzola
When it comes to due diligence and multi-management, Aletti Gestielle Sgr’s Luca Anzola does not leave anything to chance. The asset management company follows a rigorous process starting from a quantitative market screening.
Aletti Gestielle Sgr is an Italian asset management company owned by Banco Popolare Scarl, within which Luca Anzola has led the Research and Due Diligence team for the Multimanager division since 2009.
The Multimanager division currently manages around $1bn in different investment strategies with a particular focus on Absolute Return strategies.
The team led by Anzola covers both the manger selection process and operational due diligence. “The team has an active function in the investment process thanks to a long-standing experience in the industry enforced by a solid contact network in the international fund community,” Anzola says.
Prior to joining the multi-management division, he was in fact head of hedge fund research of the group, where he worked for almost six years.
As he explains, his team’s selection process starts from an overview of the market, together with an internal research looking at the overall fund positioning and performance analyses.
“We try to understand the managers’ attitude that we conduct thorough a qualitative and quantitative preliminary screening of funds which is crucial to our selection process,” he says.
From off-shore to Ucits funds
The Multimanager division has gone through interesting times since it was a purely alternative funds of hedge funds provider from the early 2000 up until 2009, when it started to become mainly focused on Ucits managers with the establishment of an internal team responsible for both due diligence activities and the investment process itself.
“We apply a very strict due diligence process and we have become increasingly less invested in off shore funds and today we have most of our AUM in Ucits funds, the majority of which in absolute returns strategies.
“We are now looking to increase also our long-only fund of funds too, through the launch of ‘Gestielle Selection Equity 50′, a fund of fund that invests in both kind of strategies,” Anzola explains.
Talking about the process itself, the selector explains that he goes through a screening which is both qualitative and quantitative, but it is more focused on the qualitative side.
As he explains, contacts are essential at this stage of the process as they allow selectors to anticipate trends and try to spot value.
The range of funds that come as a result of the selection process then tends to vary by 10-12 new entries each year. “We tend to establish internally what the global market trends are.
Once we have identified the contexts that can be interesting for us, we look for strategies could outperform in that space. We are not necessarily contrarian, however, and we put a lot of effort also in the subsequent bottom up selection phase” he says.
Anzola also says that his team and him regularly meet fund managers ahead of undertaking the due diligence process.
“We can only select managers that are included in our approved list and, in order to be part of it, a manager must pass both our investment and operational due diligence analyses.
“In the investment due diligence we run a detailed analysis focused on five main qualitative aspects: Investment Management Company; Fund Manager/ Team experience / past track record; Strategy / Portfolio construction process; Risk Management and Transparency. We then assign a rating on all of them together with and overall Investment due diligence rating,” he says.
At the end of the whole due diligence process, for each fund, a dedicated due diligence report is then produced but the analysis doesn’t stop here as there is an intense monitoring activity that must take place after a manager approval.
“In addition to the periodic analysis on the public documents such as letters and performances, we have to produce quarterly updates trough meeting and conference calls and we have to review the due diligence periodically,” Anzola also explains.
Red flags and manager qualities
Quite predictably, Anzola and his team do not trust style drifts and are generally weary of any lack of transparency in the process of information gathering.
“If we spot any inconsistency in what is declared and the track record or also if the track record of a company is spotless, that makes us think twice. Also, we take extra care in tracking down eventual conflicts of interests and portfolio liquidity risk,” he says.
As per manager qualities, Anzola and his team are after very experience, highly reliable fund managers who don’t chase market trends. “References are very important to us and, for this reason I try to maintain a strong network within the industry,” Anzola concludes.