Introduction

Round Tower internally reviews investment processes and seeks to identify areas for improvement in our clients’ approaches. Generally our clients are highly experienced investment managers with long track records of success. Insourcing, by definition, is a new investment activity for institutional investors. Any new internal activity cannot have the same level of experience and knowledge of an alternative out-sourced external manager solution so it is crucial that the fund identifies the tangible logic behind the insourcing decision, and that any insourced process is managed within a strict, independent, and experienced governance structure.

If the resources to achieve this undertaking are not available then the perceived cost benefit of insourcing will be quickly eroded. Insourcing can be of significant benefit to a Fund’s members but it is crucial that the Fund’s Board undertakes significant due diligence before it insources investment management activities.

This quarter’s perspective provides a framework for investors to consider insourcing and identifies the governance structure that is vital to the ultimate success of the insourcing decision. Please contact us if you would like a copy of the perspective.