For many active managers, performance numbers end up as the headline. They’re the first thing investors see, and the easiest way to compare strategies. But numbers are also a sort of scoreboard - at times they oversimplify and don’t tell your full story .
In an environment where investors, consultants, and partners demand more transparency, the ability to define your investment DNA is becoming a key differentiator. Your DNA is the set of repeatable processes, behaviors, and decision-making patterns that drive returns, and that will determine whether your performance is sustainable over time.
Performance data is backward-looking. A strong run without a clearly articulated process can raise as many questions as it answers:
- Was it skill or luck?
- Can it be repeated in different market conditions?
- What risks are embedded in the way you generate returns?
Managers who can clearly articulate how they invest build credibility and trust, even in periods when numbers aren’t at their peak.
Your DNA is what makes your results yours. It’s how you consistently find, size, and exit investments — and how you adapt when conditions change. Strong DNA is:
- Repeatable – grounded in a consistent process.
- Adaptable – able to adjust to different market regimes without losing its core.
- Distinctive – meaningfully different from peers, even within the same broad style category.
1. Market Structure
Be clear about your hunting ground. Where do you consistently find opportunity, and why? What structural inefficiencies or market features do you focus on?
2. Position Life Cycles
Explain how ideas are sourced, sized, monitored, and exited. How does the thesis evolve over time? How do you scale in or out while managing conviction and risk?
3. Manager Behavior
Highlight your approach to decision-making under stress or in volatile markets. How do you avoid bias? How do you balance conviction with flexibility?
Defining your DNA isn’t a branding exercise. Doing it correctly gives you a competitive advantage by:
- Setting you apart from peers with similar styles or factor exposures.
- Building allocator confidence that your process is durable.
- Strengthening your positioning in due diligence and capital-raising conversations.
Finally, ask yourself these questions to evaluate how well you can define and communicate your strategy’s DNA:
- Clarity – Can you explain your edge in two or three plain-language sentences?
- Consistency – Can you point to multiple periods where you’ve applied the same process successfully in different market conditions?
- Evidence – Do you have concrete examples that illustrate your decision-making framework in action?
If you are unsure about any of these, that’s a signal to refine how you define, document, and communicate your process:
- Document it in clear, plain language.
- Illustrate with examples of how you’ve applied your framework in different environments.
- Show adaptability — highlight changes you’ve made without losing your core identity.
Bottom line: Numbers get attention, but process will earn you trust. When you can clearly define and communicate your strategy’s DNA, you make it easier for the right investors to see why your approach deserves a place in their portfolio, no matter the market context.
