When evaluating private debt managers, family offices should consider the following key factors:
- Track record: Family offices should evaluate the manager’s performance history to determine if they have a consistent track record of generating returns.
- Investment process: Family offices should understand the manager’s investment process, including how they source deals, conduct due diligence, and manage risk.
- Quality of underlying assets: Family offices should evaluate the quality of the underlying assets in the manager’s portfolio to determine if they are diversified and have strong cash flow.
- Risk management framework: Family offices should assess the manager’s risk management framework to determine if they have a robust process for managing credit risk, liquidity risk, and interest rate risk.
- Alignment of interests: Family offices should evaluate the manager’s incentives to ensure that they are aligned with the interests of investors.
- Expertise: Family offices should assess the manager’s expertise in the private debt market, including their knowledge of the market and their ability to identify attractive investment opportunities.
- Transparency: Family offices should evaluate the manager’s level of transparency, including their willingness to provide information about their investment process and portfolio.
In summary, family offices should consider the manager’s track record, investment process, quality of underlying assets, risk management framework, alignment of interests, expertise, and transparency when evaluating private debt managers.