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Selecting
Advisors
ALTERAMA seeks those Futures Managers it considers
to be "best
of breed" by performing a 4-part selection process.
I. The process begins with a series of quantitative filters used to
identify the Futures Managers who rank among the best in their peer
group.
II. Those who pass ALTERAMA's initial screening are then subjected
to an intense qualitative evaluation. (ALTERAMA is careful to measure
CTAs on their individual merits and on their relative, differentiating
qualities.)
III. One of the most important aspects of ALTERAMA's due diligence
process is the face-to-face meeting with the Futures Managers. Here,
ALTERAMA is able to:
Understand clearly the manager's strategy and edge.
Evaluate the manager's asset allocation, hedging, leverage, and risk
management policies and procedures
Measure the viability of the manager as a sustainable business.
Meet the manager's principals and key staff and understand their responsibilities
and relationships.
Assess the manager's procedures for back office and position valuation.
Evaluate the viability of the manager's systems and disaster recovery.
Perform background screenings.
IV. Following the face-to-face meeting, ALTERAMA conducts another
series of quantitative studies based on what has been learned to date. Frequently
these studies focus on stress testing and scenario analysis of performance
and volatility, especially during times of market dislocation or poor performance
for the strategy.
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Risk Management
Alterama, Inc. views
risk management as a continuation of our rigorous
due diligence process. The primary goal of the due diligence process is to establish
accurate expectations for every manager. The goal of risk management is to identify
and minimize risk by monitoring for deviation from the expectations established
during the due diligence process. Examples of possible deviations include excessive
volatility, trading in unauthorized markets, excessive leverage, and style drift.
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