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Family Wealth Management: Seven Imperatives for Successful Investing in the New World Order by Tom McCullough, Mark Haynes Daniell

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Chapter 18

Selecting Individual Investments and Investment Managers

A thorough investment analysis goes beyond understanding history, estimating economic cycles, and forecasting the future investment environment to spot trends, risks, and opportunities. Successful investing also involves an assiduous review of each potential investment manager and mandate, including past results, the chosen business model, competitive performance, industry regulatory environment, asset backing, team dynamics, environmental liabilities, forecast results, and other measures relevant for the kind of investment proposed.

After the long-term strategic asset mix has been determined, the investment policy has been documented, and the asset-class universe has been identified, the investor will begin the process of reviewing and selecting investment managers who will manage individual mandates. The actual investment management function can be performed internally within a family office or can be outsourced to any number of external investment managers. The latter is the much more common route families choose due to the complexity of the task and the experience required for successful execution. They choose investment management specialists who will be responsible for managing the funds within specific guidelines and parameters.

It is critical for the investor to probe deeply into the quality of the thinking underpinning the investment thesis and the underlying assets under consideration, rather than simply ...

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