Here are some best practices for family offices to follow when evaluating the transparency of private debt managers:
- Conduct thorough due diligence: Family offices should conduct thorough due diligence on private debt managers before investing to ensure that they have a clear understanding of the manager’s investment strategy and activities 1 2 .
- 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 2 3 .
- 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 2 .
- 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 4 .
- 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 4 5 .
- 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 6 .
In summary, family offices can follow best practices for evaluating the transparency of private debt managers by conducting thorough due diligence, asking specific questions, reviewing documentation, evaluating reporting, understanding the market, collaborating with other family offices, and reviewing ESG factors.