How Our Approach To Corporate Governance Creates a Better Asset Management Business
At RueOne, we believe that a key part of next generation investing in alternatives is making a commitment to best practices in corporate governance. Good governance is not only “nice to have” – it’s essential to making better investment decisions and creating investment processes that help ensure a better performing business. Here’s why:
The financial crisis laid bare the limitations of governance practices and altered the way many of today’s institutional investors think about alternatives. Conflicts of interest were built into the very fabric of many alternatives firms. Some principals, left to their own devices, did everything they could to protect firm assets as the markets fell. But this sometimes meant putting the firm first. Moreover, as revenues fell some firms jettisoned some of the most critical investor functions, like investor relations, leaving investors with little recourse.
At RueOne, we’ve changed all that. We’ve put in place a best practices governance structure that includes multiple layers of oversight to our investment processes and management so investors can invest with greater confidence.
· Best Practices Board Structure: RueOne has established a Board of Directors with the mandate to oversee the organization. The board consists of Independent Directors and professionals from the RueOne management team as well as a number of committees which include: (1) an Investment Committee; (2) an Audit and Finance Committee; (3) a Nominating and Governance Committee; and (4) Legal, Compliance and Cybersecurity.
· Council of Experts: We have also assembled an impressive array of experienced investment talent for our advisory board, which we call our Council of Experts. Each member is a highly experienced investment professional with specific domain expertise. Our Council of Experts gives us specific transactional expertise for every deal we present to our investors. As a result, we believe our investors see only the highest quality investment opportunities that have been thoroughly vetted.
Our commitment to better governance extends to a number of investment practices that better serve investors and our partners alike:
· Our incentives are aligned with those of our investors. We are all looking for compelling investments, what better place to invest than our own unique product with tremendous infrastructure and oversight? Because we invest our own capital in every one of our deals, we are motivated to find great investment opportunities rather than lower quality deals just to collect fees.
· We don’t commingle assets with differing liabilities: Commingled assets and liabilities can cause serious problems in volatile markets. We have specifically crafted our process to segregate every investment that we present to our investors.
· We don’t collect fees on unrealized profits: If managers collect incentive fees on unrealized profit, once they fall under the high water mark, they may have the incentive to walk away as opposed to working through investments. Poor performing funds also lose talent, which causes a similar problem for existing investors. Our diversified business of individual segregated investments enables us to weather difficult environments and keep talent in place.
· We’re Committed to Greater Transparency:At RueOne, there are no opaque fund structures. You choose only the investments that meet your specific criteria. We provide full transparency in addition to our extensive due diligence to enable you to make informed investment decisions.
In short, better governance in alternatives is an idea whose time has come, and we’re doing it at RueOne.
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