The mandate offering is a clean exposure to the few key investment ideas we identify in the large cap space. When we cannot identify suitable investments we want the option of being able to do nothing; either return the capital to the client or investing it consistent with the client’s benchmark (as directed by the client).

Long Tail Asset Management views the  mandate offering as an extension of our existing analysis and to be considered by investors seeking:

  • A concentrated exposure to the global markets; and
  • Exposure only to the investments we have the strongest conviction in.

The offering is significantly more concentrated than standard domestic investment mandates. Mandates will generally be invested in an individual Investment Tenet, which will have exposure to between one and four holdings. We view the offering as appropriate for institutional investors who have the internal systems and controls to quantify their appetite to potentially a single or highly concentrated investment in the global markets.

The structure of the offering essentially disaggregates the portfolio management function from the stock selection function. The client is performing the portfolio management function and Long Tail Asset Management performs the stock selection function. Our fees for managing the mandates reflect this distinction and are designed to compensate us for delivering excess returns and essentially cover our costs should we not perform.

The management fee is fixed at $400,000 per annum (plus GST) plus a performance fee of 20% (plus GST) of excess returns above an agreed benchmark.

To assist a client to dimension their appropriate exposure, Long Tail Asset Management provides a framework detailing the perceived opportunity including:

  • Number of securities we intend to invest in (potentially only one security);
  • Size of the investment opportunity;
  • Guidance concerning the sectors of the market within which the opportunity lies; and
  • Detail regarding the current liquidity, market capitalisation and index weightings of the opportunity.

We will have varying levels of capacity for individual mandates depending on our perception of the available opportunities. Regularly we will have no capacity. Existing mandate clients will be given (exclusively) the first opportunity to participate in additional investments should we identify them.

Yes or no?