Family offices can assess the level of transparency of a private debt manager’s investment process by taking the following steps:
- Ask specific questions: Family offices should ask specific questions about the manager’s investment process, portfolio holdings, fees, and risk management procedures to ensure that they are transparent about their activities 1 2 .
- Review documentation: Family offices should review the manager’s offering documents, including the private placement memorandum and subscription agreement, to ensure that they provide adequate disclosure about the investment strategy and activities 1 .
- Evaluate reporting: Family offices should evaluate the manager’s reporting to investors to ensure that it is adequate and provides the necessary information to monitor investments and detect potential issues 3 .
- Understand the market: Family offices should have a clear understanding of the private debt market and the challenges associated with transparency, including fragmentation and limited market data 3 .
- Collaborate with other family offices: Family offices can collaborate with other family offices to share information and best practices for evaluating private debt managers and ensuring transparency 4 .
- Review ESG factors: Family offices can review how external managers incorporate ESG factors into their investment process to ensure that they are transparent about their approach to responsible investing 5 .
In summary, family offices can assess the level of transparency of a private debt manager’s investment process by asking specific questions, reviewing documentation, evaluating reporting, understanding the market, collaborating with other family offices, and reviewing ESG factors.