Allocators often ask for a concise framework that moves beyond marketing decks. This checklist supports a first screening pass on boutique managers.
1) Process Integrity
Review whether the manager can explain its investment process in the same terms across sales, portfolio management, and risk teams. Inconsistency is usually an early warning signal.
Key questions:
- Are portfolio construction rules documented?
- Is there a clear distinction between research inputs and final decisions?
- How often is the process reviewed and updated?
- What would force the team to change the process?
2) Risk Governance
Look for hard limits, escalation protocols, and evidence that risk controls are enforced in stressed markets.
Key questions:
- Which limits are hard versus soft?
- Who can override a limit, and how is that logged?
- What happened the last time a drawdown trigger was approached?
- Is monitoring independent of the portfolio manager?
A complete framework should include drawdown triggers, concentration thresholds, and independent monitoring.
3) Implementation Quality
Execution quality often separates adequate from strong outcomes. Assess turnover discipline, liquidity management, and trading governance.
Key questions:
- How are trades prioritized when liquidity thins?
- What is the expected capacity before implementation quality degrades?
- How are transaction costs measured and reviewed?
4) Reporting Cadence
Institutional reporting should provide attribution, exposures, and risk diagnostics in a format that investment committees can evaluate quickly.
Key questions:
- What arrives monthly versus quarterly?
- Can the report answer “what worked, what broke, and what changed?”
- Are exceptions and breaches disclosed promptly?
5) Alignment and Capacity
Confirm capacity assumptions, fee alignment, and team structure. A boutique manager should articulate where strategy scalability begins to impact execution quality.
Key questions:
- What is the soft close plan, and what triggers it?
- How are key-person and succession risks handled?
- Do economics still align if assets grow faster than expected?
Practical Note
Use this checklist to structure first-pass diligence. Full operational and legal diligence still belongs with your counsel, consultants, and internal governance process.