Geoffroy Perret, funds selector at Swiss wealth management company Reyl Intesa Sanpaolo, delves into the processes, emerging trends, and strategic insights guiding fund selection and portfolio management.
Could you walk us through the key criteria and processes you use when selecting external funds for your portfolios?
Our selection of external funds is the result of a rigorous and disciplined due diligence process to select the best funds that meet our expectations. The selected funds are then presented and approved by our investment committee. The due diligence process follows distinct steps: qualitative, quantitative and operational. The qualitative and quantitative sides are performed jointly.
On the qualitative front, several criteria are predominant: the fund’s legal structure must be adequate and well-structured, including a review of the Private Placement Memorandum, subscription documents, side letters, Board of Directors, and registration with competent authorities. A strategy review, which involves an on-site meeting with the management team, is essential to understanding the fund’s overall strategy, the manager’s investment philosophy, approach, and risk management. Additionally, an analysis of the quality of the client base and reference checks is conducted, along with an assessment of transparency provided to investors, including direct access to the CIO.
The quantitative side is managed using two platforms: Allocator and Morningstar. This includes a study of the fund’s risk parameters, internal simulations, drawdown and recovery analysis, as well as correlation and volatility assessments. Comparative studies with peers are also performed, along with a review of historical exposures and risk concentration.
Once the first two steps receive the green light, the team operates due diligence (ODD) – an important part of the process, especially for alternative strategies, where we discuss with the CFO and COO to review the operational framework of each fund. This phase aims to address questions such as: Is the operational setup robust? Are the counterparties reputable or second-tier? If Operational Due Diligence (ODD) identifies any “red flags,” the due diligence process halts, even if the investment side has a positive outlook. We then invite the fund to resolve these issues if they want us to reconsider the opportunity.
Conversely, if we receive a “green light,” the investment team prepares an investment memorandum, summarizing all research and conclusions, to present the opportunity to the Investment Committee for a final decision. Our selection process also integrates ESG factors, examining each fund’s structure. An Article 8 or 9 structure is preferred for mutual funds, alongside a minimum percentage reporting environmental or social investment. For alternative funds typically based in offshore structures, our focus is on their adherence to ESG principles.
What distinguishes a truly successful portfolio manager from the rest?
They can generate consistent returns across varying market cycles, reflecting a robust investment process and disciplined risk management framework. It is their skill in building a cohesive team and retaining talent over time, their humility and willingness to challenge their views, and questioning assumptions as part of continuous improvement. Finally, it is their commitment to providing transparency to investors, whether in prosperous times or challenging ones.
How have recent market conditions influenced your approach to balancing aggressive versus defensive portfolios? Are there particular market indicators or trends you focus on when adjusting these strategies?
We rarely use aggressive funds, instead prioritising funds that show low correlation and minimal overlap to achieve effective diversification. Each chosen manager is expected to bring distinct value, helping us navigate challenging periods more effectively. To support this, we continually monitor various macroeconomic data and market indicators, which are key to our internal investment process for assessing market cycles. When selecting funds, and as previously mentioned, ESG factors are considered in our investment process but are not yet a condition to invest in a fund. We try favouring Article 8 or 9 funds.
What current trends are you observing in the private equity space, and how are these influencing your selection of external private equity funds?
We are witnessing a democratisation trend in private markets, particularly in private equity and private credit, traditionally reserved for institutional investors and family offices but now opening to individual investors. After a challenging 2022, when capital-raising slowed, firms adapted by targeting this new client base. This shift includes the rise of subscription platforms to streamline operations, lowered entry points for private markets funds with minimum investments as low as USD/EUR 100k, and the integration of AI to support digitalisation—enhancing KYC management, transaction flows, and investment transparency. Additionally, more frequent valuations and semi-liquid offerings are emerging, requiring limited capital calls and appealing to a broader range of investors.
Do you anticipate ETFs becoming a larger part of your portfolios, and if so, in what capacities?
We use ETFs as a satellite part of our portfolios to take exposure from time to time to a specific sector, a thematic and/or a regional location. We always compare ETFs and funds to select the best instrument and expect this approach to continue.
How does Reyl Intesa Sanpaolo leverage Switzerland’s regulatory framework and financial expertise in its fund selection process?
Switzerland has always been an international financial centre and a must for investment funds wishing to develop their investor base with a quality clientele. As a result, we benefit from this attractiveness to constantly expand our network and our fund universe.
