Myriad managers. Multiple portfolios. One Process.

THE BIVIUM PROCESS

Our process begins by taking a proactive stance on finding alpha opportunities for our clients in inefficient areas, and seeking to understand the drivers of excess returns in any given asset class. The ability to identify alpha producing managers across asset classes enables us to construct portfolios that meet the specific goals of our strategic partners.

While there are many stages in this proprietary process, robust due diligence, portfolio management and risk management are integral components.



Robust Due Diligence

We focus on understanding and vetting all investment and non-investment aspects of a firm (e.g., legal, compliance and operations). We scrutinize the principals’ experience, gathering the data required to become comfortable with the manager while developing a comprehensive profile of the firm, which enables us to fully understand the risks specific to each firm.

Through ongoing qualitative and quantitative research, we identify rising investment stars not yet discovered by the institutional asset management industry, identifying the top quartile of managers early in their lifecycles.

At the end of our assessment, we have a complete understanding of the emerging manager, including background, investment agility, decision-making, financial strength, operating infrastructure, and corporate governance.

Our skill in identifying top-tier managers is distinguished in part by the success factors we seek. These include:

  • Demonstrated high levels of integrity and fiduciary responsibility
  • Seasoned professionals with notable investment expertise; the managers we identify often have more than ten years of prior experience at larger firms
  • High quality teams that have shown strong performance, unique skill sets, a differentiated strategy, and/or who target specific geographies that leverage their expertise, thereby allowing for differentiation in challenging market environments
  • Complementary experiences among the professionals in the general partner team and a cohesive culture
  • Significant research and thought leadership
  • Long-term compensation opportunity broadly available across the investment and support team, which drives innovation, entrepreneurialism and the will to succeed

Operational due diligence augments our investment due diligence and is equally important in our analysis of managers. This aspect of the process involves examining operations staff, reporting and trade practices, conflicts of interests, financial strength and legal liabilities, business continuation policies, risk management, and internal controls. Our objective is to guarantee that sound governance mechanisms are in place throughout the organization.

In sum, we marshal all of Bivium’s resources to support the end goal of finding boutique and emerging managers who can consistently deliver differentiated sources of excess return. Our evaluation process typically takes six to nine months.



Expert Portfolio Management

At the outset, we clearly define our strategic partner’s objectives before assembling diverse managers best equipped to pursue the universe of opportunities available. Each step of the process is dynamic, iterative and collaborative.

In constructing portfolios, we combine managers synergistically to meet our clients’ objectives. For example, we run portfolio optimizations and stress tests on the aggregate portfolios to evaluate excess return expectations, risk levels and return correlations. Importantly, we take a forward-looking approach to portfolio construction and incorporate our insights with regard to future alpha and business risk.

Managing risk to optimize returns is at the core of the portfolio management process. The process empowers our underlying managers to act on their highest convictions. However, at the overall portfolio level, we continuously assess risk and consciously minimize and monitor structural and/or stylistic bets versus the benchmark.



Integrated Risk Management

Risk management is a core component of the investment process, not an overlay applied at the end.

We monitor and manage investment risk based on understanding the systematic and non-systematic bets in the portfolio. The goal is to minimize the market risk while understanding the specific risk each manager is taking. In addition, our team reviews and conducts risk-and-return attribution on a granular level to understand portfolio exposures. Disciplined and comprehensive reviews are regularly performed on both our portfolios and the underlying managers within the portfolio.

Managers are continuously monitored to ensure compliance with investment guidelines and industry regulations. A variety of risk reviews are completed on managers daily, weekly, monthly, and quarterly from an investment and business risk standpoint. Onsite manager interviews and conference calls are regularly conducted to ensure industry best practices and accurate reporting.



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