The most effective Asset Management Team Lift-outs are where assets and relationships swiftly follow the team. Much of the success of managing a lift-out depends on maintaining the continuity of the GIPS-compliant performance record. So, when considering the viability of Teams, Godliman assesses the following factors:
Track Record
In an ideal world, the team should have a 5 year track record or, as a minimum, 3 years: for example in fast developing markets or high-demand strategies (eg. Emerging Markets, Multi-Asset Absolute Return, or Small Cap, a three year performance record may suffice.
In addition to Total Returns, the team ideally needs to demonstrate a higher Active Share Count, combined with strong risk-adjusted returns and low volatility over the period.Godliman uses a variety of data sources to identify top decile and top quartile strategies.
Investment Process
Once a high performing strategy has been identified, the Investment Process will dictate whether there is a distinct ‘lift-out’ team behind the strategy. In many firms, the investment process has been ‘industrialised’ in the sense that each specific function of the investment process has been segmented into narrow silos of deep expertise. Overall fund performance in these firms is the result of many contributing areas of the investment platform typically including: alpha generation, beta replication, risk management, implementation, dealing and product management.
Within the Institutional market there are a small number of teams that operate as distinct, coherent units, even within Institutional managers.  In the Retail market, it remains common to find teams managed relatively autonomously within a ‘multi-boutique’ structure.  The key criterion with regard to Investment Process is that the team should be able to replicate the process, in its entirety, within the new company.
Godliman maintains an ongoing qualitative research effort to assess the drivers of Investment Process and Performance within high performing teams.
Team Size
A Team Lift-out can be defined as when two or more people move from one company to another at the same time.  The key factor to determine how large the team move should be is determined by the specific investment process: it is critical to ensure that all the key investment professionals responsible for the generation of investment performance move as a coherent unit.
Godliman engages with every team member participating in a Lift-out to ensure that all team members feel equally motivated and incentivised to move.
Client Base
The likelihood of relationships and assets following is often contingent on the fund structures for the underlying assets under management; the number of clients; and the distribution channels (i.e. Institutional, Retail or Wholesale) through which the assets were raised.  Asset portability is always an unknown.
Godliman works closely with Teams to help them realistically to assess the portability of their assets.  Godliman has invested considerable resources in identifying top performing teams, and maintains an ongoing dialogue with them, allowing us to engage with top talent proactively and systematically.