Track Record Attribution: Designing The Menu

• Published date: 28 March 2020
• Subject Matter: Finance and Banking, Strategy, Financial Services, Fund Management/ REITs, Investment Strategy
• Law Firm: MJ Hudson
• Author: Mr Nick Gordon and Jon Greene

We've all been there, haven't we? Sat down opposite a significant (or insignificant) other at Alain Ducasse at the Dorchester or similar eatery in your current city. "Can we get a photo with Big Al? I am a huuuuge fan" asks your dinner guest to the immaculately coiffured maitre d'. He shoots your companion the type of withering look that can only be learnt in a well-heeled Paris Arrondissement. "I regret to inform you that M. Ducasse is currently in Tokyo."

How then is this 'Alain Ducasse at the Dorchester' when Alain Ducasse is currently at Beige, in Tokyo? What allows this restaurant to display this name over its door? What guarantees do we have that the food will live up to our expectations?

This, dear fund manager, is a question of attribution, and it is as relevant to fine dining as it is to fine investing - for both first time / spin out managers raising their first fund and established groups with several funds under their belt, but, where M. Ducasse has the independent assessment of the Michelin man to back up his claim, you (almost certainly) do not.

Being able to credibly claim attribution to one's track record is a topic of importance for both first time or spin-out fund managers and more established firms. For first time or spin-out managers the issue is the requirement to demonstrate that the track record you are laying claim to is in fact your own. For more established managers, the departure of senior investment professionals to a rival manager, new team members, and expansion into new investment strategies are all scenarios that can give rise to questions of track record attribution. So, how can you hope to prove that you were responsible for the impressive track record you lay before your salivating investor prospects?

This article, supplemented by those that follow, will provide you with a framework for selecting, by means of attribution scoring, which investments to include within a track record. It should help you credibly argue to prospective LPs that the claimed track record can, in fact, be reasonably attributed to you.

1. List out all the deals you have worked on.

Start with a large sheet of paper. Sit down with your colleagues and list every single deal you can recall being involved with. Don't worry at this stage about degree of involvement. You are simply trying to get a record of your entire investment history down on paper at this stage. It will be helpful to record some qualitative information on each transaction, such as deal...