Seven Factors to Consider When

Choosing an Active Manager


Trust Management Educational Series

Many charities appoint an active fund manager to look after their investment portfolio. Active managers research a wide range of shares, bonds and properties, and select those they expect to generate superior returns.


An earlier article explains that Trust Management recommends a research-based approach to choosing managers and determining the allocation to active and index managers. When selecting an active manager, we note seven important factors to consider.



Successful active management is dependent on high quality research which starts with experienced and appropriately skilled staff. The manager should have a research team with complementary skills, and that works well together.



A strong Investment Committee and a disciplined, well-documented investment process are important. Good technology and portfolio monitoring systems are also needed to ensure risks are appropriately managed.



Costs need to be reasonable compared to the value the manager is expected to add. Costs include not only fees paid to the manager, but also the expenses paid to brokers, auditors, custodians, and trustees.



The performance of the manager needs to be considered against that of other managers investing in the same market, and versus the returns a relevant market benchmark. The level of risk taken to achieve the manager’s performance is also an important consideration.



The interests of the manager’s staff should preferably be aligned with investors. This can be affected in various ways including: giving staff an ownership stake in the firm, having a long-term incentive scheme based on investment performance, or having staff invest alongside clients.



Quality investment managers have strong internal controls to protect client funds. Investors should request an independent audit report that verifies that the manager has an effective system of internal controls to prevent fraud and minimise errors.



Successful investment managers are able to clearly explain their approach to active management and how they add value. Investors should seek a manager that can explain the investment philosophy clearly and act in accordance with it.


Grant Hope

Chief Executive Officer

09 550 4044









Shane Coward

General Manager

09 550 4045









John Williams

Investment Manager

09 550 4046



Want to know more?

Trust Management can provide advice to charities about managing their investment portfolios and selecting investment managers that are appropriate to their investment objectives.


If you have any questions, or would like to know more about selecting an investment manager, please do not hesitate to contact John Williams on (09) 550 4046.


This paper seeks to provide some detail and explanation about bond investments. The paper aims to provide a basic oversight of the topics mentioned, using simple terminology in easy to understand language. The paper is not intended to be the definitive guide on bonds. We recommend investors seek advice before investing.