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HomeMy WebLinkAbout2009 01 21 Related to Regular 602 (2)Insert Investment Firm Name and Product Name Here Date of Completion THE BC~GDAHN CiRC~T~I' DUE DILIGENCE QUESTIONNAIRE Date of Request: xx/xx/2008 Date of Response: xx/xx/2008 Offering under review: Please read the following instructions before completing this questionnaire. In order to minimize the required time to prepare our due diligence questionnaire we have divided our due diligence questionnaire into three different phases. Each phase is dependant on the previous phase and should be completed and submitted independently. Once we have reviewed your responses for a given phase, we will contact you with respect to issues or required clarification on that phase or to initiate the next phase. • Please complete all questions. • If a question is not applicable, please answer N/A. • Please maintain the integrity of the document and complete answers under each question or attach with clear reference. • For attachments, please reference the page and number of the question. Attachments should be in MS Word or Excel format. Thank you. J. Alexander Kallebo, CFA Manager, Investment Research & Performance Reporting Email: AlexanderK a,Bo~dahnGroup.com Phone: (863) 904-0860 The Bogdahn Group Due Diligence Questionnaire -November 2008 Version 1 Insert Investment Firm Name and Product Name Here Date of Completion PHASE I FIRM CONTACT INFORMATION 1. Please attach ADV part I and part II. 2. Provide name of the company, address, telephone, fax number, a-mail and web address. 3. Provide primary contact within the firm. 4. Name, title and contact information of firm member filling out this questionnaire. INVESTMENT MANAGEMENT TEAM 5. Is the firm's investment process team-based, committee-based or does one individual make the final decisions? 6. What is the frequency of regularly scheduled committee meetings? How are they conducted? 7. Provide the names and titles for all members of the investment committee. 8. List all members that are involved in the investment decision-making process. Please include tenure, role and their background. 9. Provide a list of portfolio manager(s), key analysts and team members involved in the decision- making process for the offering under review. Please include: 9.1 Their tenure with the firm, as well as with the offering under review. 9.2 Their prior work history including their responsibilities (going back ten years from the present). 9.3 Their specific roles during their tenure with the firm including non-investment responsibilities (e.g. marketing, management, etc.). 10. Does the firm have any minimum qualifications for investment managers (education, experience, designation)? 11. If one individual makes the final decisions, how would the offering function if that person left, either temporarily or permanently? 12. Has there been any professional turnover (principals, portfolio managers, analyst, traders and key personnel) in the offering in the past ten years? Please list the names and the reason for leaving. 13. What is the average tenure of the portfolio managers with the firm and with the offering under review? 14. Describe the interaction between the portfolio manager(s) and the independent board of directors. 15. Are investment managers and analysts available to advisors via conference calls, email or in person? RESEARCH 16. Explain how the research team is organized. 17. Do you have a centralized research database or how do you collect, store and share research internally? 18. How do you generate ideas? Name three primary sources. 19. Which analytical software do you utilize? 20. What percentage of the firm's research do you complete internally versus obtain from external sources? The Bogdahn Group Due Diligence Questionnaire -November 2008 Version 2 Insert Investment Firm Name and Product Name Here Date of Completion 21. Do the firm's investment managers or analysts conduct company visits and meet with management teams? If yes, how many companies are visited (or visit with the firm) per year? 22. For the offering under review, is it a requirement to meet with the management team before adding a holding to the portfolio? 23. Describe how analysts or the research team share information within the company and how they interact with investment managers and/or the investment committee. 24. Are there any unique elements to the research process or any unique resources available to the firm that gives it a competitive advantage over its competitors? 25. Are analysts or research staff compensated in relation to their recommendation? 26. What percentage of the portfolio managers' and research analysts' time is spent on non-investment activities (marketing, client meetings and attending conferences)? PRODUCT SPECIFIC INVESTMENT STRATEGIES 27. Attach an updated presentation/marketing booklet ("Pitch Book") of the offering under review. 28. Describe the investment philosophy for the offering under review. 29. Explain the specific investment strategy for the offering under review. 30. Define and describe the universe from which stocks are screened (market cap range and other relevant quantitative/qualitative characteristics). 31. Describe the investment selection process in detail. 32. Discuss the offering's buy and sell criteria. In particular, how is the target price determined? Is it static or dynamic? 33. Are the buy and sell theses documented in writing? If so, are they available to advisors? 34. What criteria does your firm use to determine that there is sufficient liquidity for the firm's total position in a stock? 35. Explain turnover (trimming or full round of buy and sell) in the portfolio and provide the turnover ratio average for the past 1, 3 and 5 years. 36. Provide an example of your investment process from inception of an idea to implementation and subsequent liquidation that was successful. Comment specifically on what made the investment successful. 37. Provide an example of your investment process from inception of an idea to implementation and subsequent liquidation that was not successful. Comment specifically on what made the investment unsuccessful. 38. What distinguishes this offering from other similar offerings? In particular, what are the sustainable competitive advantages of the firm, its resources, its philosophy, its culture and its investment professionals that will lead to outperformance of this offering? 39. Discuss, and provide reasoning for, the market environment where the philosophy and investment process for this offering will be favorable, as well as not favorable. 40. What is the investment time horizon or expected holding period during which an investment, in the offering under review, should reach its target valuation? 41. In the offering under review, how much attention is given to tax efficiency. What specific methods are used? The Bogdahn Group Due Diligence Questionnaire -November 2008 Version 3 Insert Investment Firm Name and Product Name Here Date of Completion 42. In what form is this product available (separate account, commingled, mutual fund, limited partnership)? PRODUCT PERFORMANCE EVALUATION 43. What performance software do you use? 44. Who is responsible for preparing the firm's performance numbers and how are they compiled? 45. Is the firm or any of the firm's offerings GIPS compliant? 46. Is the composite performance net or gross of all fees, including commissions, management and incentive fees? 47. How often are performance numbers audited? 48. What is the offering's performance goal? 49. Which benchmark(s) is appropriate for the offering? Please explain why. 50. Which peer group(s) is appropriate for the offering? Please explain why. Specifically, please address difference to the peer group suggested by Morningstar. 51. Over what time period, rolling or point in time, should performance evaluation be done for the offering? 52. In what market environment is the offering expected to out perform and why? Please substantiate with time period example. 53. In what market environment is the offering expected to under perform and why? Please substantiate with time period example. 54. Provide historical results over the last 1, 3 and 5 years, including an analysis in relation to outperformance or underperformance compared to both identified benchmark and peer group. 55. Discuss the dispersion in the portfolio. 56. Provide holding and sector attribution analysis over the last 1, 3 and 5 years. Preferably, include written commentary. 57. Provide copies of previously distributed portfolio management commentaries for the last 3 years (monthly/quarterly letters). 58. Provide a current portfolio management commentary addressing the reasons for underperformance or outperformance for the past 12 months. 59. Provide a current portfolio management commentary addressing the portfolio's position and outlook for the upcoming 12 months (or longer). PRODUCT PORTFOLIO COMPOSITION 60. What portfolio management software do you use? 61. What is the targeted asset allocation? Under what conditions would this allocation fluctuate? 62. What is the cash strategy? 63. How are sector and/or industry weights determined? 64. Discuss and compare the average allocation to foreign and emerging market investments to its benchmark and peer group averages over the last 1, 3 and 5 years. 65. What is the maximum allocation that could be invested in foreign and emerging markets? 66. How are country allocations determined? Please provide a quarterly history of country allocations. 67. Are there any regions that are typically emphasized more or less? The Bogdahn Group Due Diligence Questionnaire -November 2008 Version 4 Insert Investment Firm Name and Product Name Here Date of Completion 68. What percentage of assets is invested in illiquid securities? What is the maximum that could be invested in illiquid securities? 69. To what extent are derivatives used? Please explain any usage in detail. 70. Is there a policy, either formal or informal, regarding sector and/or industry diversification? 71. List the range of stock market capitalizations normally included in this offering. Please define the small-cap, medium-cap, large-cap, and mega-cap categories. 72. What is the typical percentage allocation to new issues of the portfolio? 73. What is the maximum percentage allocation to a single holding? PRODUCT EXPENSES 74. What is the current fee structure for the strategy? 75. Have there been any changes in the fee structure in last 5 years? If yes, please explain why. 76. Are there any other fees charged by the firm or the offering that are not disclosed in previous questions? If yes, please describe in detail. 77. Provide details of all soft dollar arrangements the firm has with any other company, including a description of the products, services and research received. PRODUCT SIZE 78. What are the current assets under management for this strategy? Please provide detail for each category (mutual fund, separate account, etc.) and by client type (public, corporate, high net worth etc.) for the past five years. 79. Provide assets under management for each year since inception. 80. Is there a closing target asset amount set for the offering under review? 81. Does the portfolio manager of this offering have responsibility for any other offerings or accounts? If so, please provide details of these responsibilities. LEGAL 1. Please state whether you are willing to acknowledge that you are a fiduciary of the fund as defined in the Employee Retirement Income Security Act of 1974 ("ERISA") and, for Florida Public Programs: Section 112.656, Florida Statues. 2. Please state whether you agree that the agreement shall be construed under the laws of the State in which the prospective client resides and federal law where applicable. 3. Please state whether you agree to venue for any judicial proceeding to be in the county in which the Board sits. 4. Are there any criminal, civil or administrative proceedings pending against the firm, the investment vehicles or any of its principals? Have there been any in the past? If yes, please explain and attach supporting documents. 5. Are there any investigations, private or public, by the SEC, NASD, CFTC, NFA, exchange, state authority, foreign authority or other governmental or regulatory authority against the firm or any members of the firm? If yes, please explain and attach supporting documentation. The Bogdahn Group Due Diligence Questionnaire -November 2008 Version 5 Insert Investment Firm Name and Product Name Here Date of Completion 6. Which regulatory authority is the Firm/Fund registered with (i.e. CFTC, SEC, etc.)? 7. When was the firm's last SEC or regulatory review? Please provide the name of the person who is responsible for compliance. Is this a dedicated full time function? If not, how time (during a quarter) is allocated to compliance? S. What policies and procedures are in place to ensure compliance with current regulations on proxy voting? 9. Is the firm or any of its principals involved in any business or other endeavors that take up significant time and/or expense from the fund? If yes, please explain. 10. Indicate the name of the firm's insurance carrier, dollar amount of coverage under the policy and extent of coverage. 11. Have there been any claims paid against the Errors and Omission policy in the last 18 months? If yes, please state the amount paid and the nature of the claim. The Bogdahn Group Due Diligence Questionnaire -November 2008 Version 6