Last month, I talked to you about private portfolio management. To follow up on that column, I’ll continue with questions that will allow you to check out the management style provided by a/your portfolio manager.

It is critically important that you fully understand the management style you’ll have in your portfolio in order to ensure that it corresponds with what you need and above all, with your risk tolerance.

Overall objectives

• What type of investor does this management style target? A conservative, moderate or active investor?
• What is the return objective of the investment mandate? Is it to produce a return higher than Index X, or rather effective risk management so as to participate in some growth with less volatility than the Index?
• How is the investment mandate structured? What are the points where a revision would be required?

Portfolio management

• How is the selection of holdings determined? What kind of analysis is used? Is the analysis technical, quantitative, fundamental?
• Of how many holdings and sectors is the mandate composed?
• When the mandate is put into place, will all holdings be purchased immediately, or will it be a progressive purchase according to the markets?
• How is the mandate adjusted? Is it in accordance with the evolution of quantitative, technical or fundamental parameters? Are other criteria used?
• What risk profile will this mandate suit?

As you can see, a number of points require clarification with the private portfolio manager prior to your authorizing them to manage your portfolio. This is not an exhaustive list of questions. However, it can serve as a reference point to launch a discussion with the manager. If you have a good understanding of their management style, you can anticipate their way of doing things in the various types of markets we can have over a year. You will be better prepared to withstand the fluctuations and will be able to sleep better.

I invite you to communicate with your portfolio manager to learn about their management style. If you have questions, don’t hesitate to contact me. I’ll be pleased to help you.

Don’t hesitate to contact me if you have questions. You can also follow me on Linkedin.

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