I am meeting with a couple of fund managers and I would love some suggestions on what questions to ask. The funds are open ended funds.
I’d focus on:
AUM; trends in AUM over the last 5 years
Explain stock selection / investment allocation process
Can they hold unlisted securities, bonds, convertibles etc
Can they guarantee minimum 60% of AUM invested in Portuguese companies
Do they have existing ARI investors in the fund
Number of holdings, diversification levels
Typical holding periods
Cash levels, how does this vary
Approach to market downturns
What benchmark are they tracking
Performance stats. Comparison to benchmarks
Team experience, track records
Staffing, trends in staffing levels
How long in business
Key service providers - administrators, custodians, auditors etc
What fees are charged, when
What costs are charged to the fund
Liquidity process
Liquidity stress-testing; what circumstances could lead to delay in repaying investors. Any issues in the past.
Can the fund gate redemptions
Who regulates the fund, what are relations with the regulator, any issues
Any legal issues or disputes
Outline resilience procedures to cybersecurity, disaster recovery etc
What reporting is made available to investors
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Gosh, that’s why I chose the RE path 
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I would focus on due diligence regarding the Portuguese GV program itself…
Other than the delays what else is the problem with the program?
What fees are paid to the fund manager, or any advisors, at levels of the structure other than in the fund itself - i.e. fees paid by the companies owned by the funds.
Laws changing / not being followed. Program frowned upon by citizenry and EU itself.
Etc etc
I guess what only matters is their past track record and the fees (entry/exit load). You can treat any unbacked claims with a grain of salt.
Also, i’d just go with BPI or IMGA index funds
Something to be conscious of, when looking at the two funds you mention, is what overlap there is between the funds. You will see that the funds hold VERY similar holdings, so if your goal is diversification this is really something to be weary of. Which funds are you looking at?
I am looking at IMGA, Portugal Liquid Opportunity Fund and Sixty Degrees Portuguese Investment Fund.
Interesting! I felt Sixty Degrees fee structure was poor - Having an initial charge AND an exit charge was too much. This is possibly why it has struggled to fund raise (only EUR9m) vs other open ended funds.
They all have their pros and cons in my opinion. The Portuguese market is very small.
As somebody in VC industry I suggest focusing on the managers and their credentials. What makes them competent in. the specific area. My experience is, more narrow, the better. We had good luck with people who have been doing “this” for long time, the CV is just new funding option for them. On the finance side I would focus on the hurtle and management fees.
I’d definitely add ‘Key Man risk’. This is a multi-year investment and you want to know, on a personnel level, that the people running the fund will be able to cope with the loss of a ‘key person’ on the investment team. Across a 5-7 year time horizon, there is clearly scope for turnover of Staff and with that turnover you want to know that this will not affect the performance of the fund.
Also, I like to ask how much money the team have vested in the fund too - If they have their own capital (not just human capital, but financial also) then they are incentivised to do well. For a lot of the open-ended funds, there is no performance fee but quite a large Management Fee. This could lead to a misalignment of interest between Fund Manager and the Investor- they could, in theory, sit on beach all day and still make money. If they have their own money (and bonuses etc) in fund, they are likely to want to do as well as possible.
I agree with both points, although ultimately, we’re investing in a quasi-PSI20 tracker, so I pretty much expect the PM to sit on the beach most of the day. I’m less concerned about key man risk and skin-in-the-game for this kind of thing than I would be for a concentrated portfolio of smallcaps, for example.
The most important things for me are that the fund will do what it says on the tin, and that they’ll stick around for the 5-7 years I need them to.
Agree - the quasi tracker element makes the OGC’s really cheeky imo.
On that note of quasi-tracker, I am surprised there isn’t just a tracker fund available, by Vanguard etc, for like 8bps. My theory is that the concentration of the index tracker would not adhere to UCITS rules and would therefore the fund would not be available to an average Retail investor.