When asked about a simple way to state the benefits of adding a diverse suite of alternative investments into a portfolio, Michael Hennessy the co-founder and managing director of investments at US$ 9 billion Morgan Creek Capital Management stated, “Instead of golfing with just a driver and a putter, now you have 15 clubs in your bag.” (Alpha Magazine, May 2009)
The Aduro team could not have stated its guiding philosophy any better. The core approach of AAG is to serve the needs of investors by providing customizable alternative investments that clearly fit a prescribed investment objective and risk profile. Using a proprietary methodology for both fund architecture and the “manager-of-managers” selection process, AAG designs custom products that adapt to and augment existing client portfolios.
Aduro’s customized solutions meet client needs in a variety of areas that include but are not limited to: liquidity, volatility, principal protection, and capital appreciation. As investors seek low correlated and/or uncorrelated returns AAG’s investment can increase overall returns while reducing volatility and correlation to broader market indices.
Portfolio Construction Process
In constructing AAG’s “manager-of-mangers” platform, the Aduro team employs a two-tiered weighting system. Tier one focuses on an investment manager’s execution of their respective strategy within a segregated portfolio or “silo” on the AAG platform. Multiple managers may operate within a given silo, provided that the investment manager decreases the overall silo risk while maintaining or increasing portfolio returns. Tier two focuses on a silo analysis and how each silo behaves relative to all other silos on the platform. This analysis provides AAG with an overall portfolio risk/return composite within acceptable risk tolerances.
A capstone to Aduro’s investment philosophy is a commitment to 100% transparency. In a “post-Madoff” world, AAG’s unique architecture provides a high degree of transparency for investors. Use of third-party administrators, auditors, and custodial relationships, AAG employs multiple layers of trust in its investment process.
AAG believes that transparency is an absolute necessity for operating the firm in a manner consistent with its mission statement:
The Mission of Aduro is to establish a lasting, alternative asset management firm that is committed to dynamic capital appreciation for investors, sound advisory for portfolio clients and concerted value for strategic partners and associates in an atmosphere of trust, integrity, and clarity.