Scaling from $100mm to $1B
I run a long-only equity strategy that’s around $100M today. Performance has been strong and meaningfully ahead of the benchmark (S&P500) since inception (2-3 years; annualizing 600bps ahead with an Information Ratio of ~0.8, vs Large Cap Core peers performance is in the top 1%).
Good to know data since inception --
- IR 0.82
- Tracking error ~7.3%
- Sharpe 1.32, Sortino 1.61
- Alpha 2.1% annualized, Beta 1.19
Up capture 153%, Down capture 106%
Capacity is $2.5B based on the liquidity parameters -- obviously right now there is no issue there. Top of mind for me is setting the strategy up as best I can for scaling up the capital behind it.
Performance is important of course, but distribution/marketing is another leg of the AM stool. Firm is a private MFO and we don't have a sales and marketing department therefore any potential distribution/promotion of the strategy is generally is done internally.
Curious for others thoughts and experience as it relates to this as to how you'd think about growing the AUM base. (I.e. reaching out to other FOs, foundations, leveraging existing network).
3 years in my mind is the bare minimum of a track record, and 5 years would feel a lot better in terms of demonstrating skill, so this is largely about making sure everything is dialed in by then (which means preparing now).
Thanks for your input!
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