SD-05.10 — Manager Structure

Business Domain: BD-05 Portfolio Management (Front office) · Applies: BOTH

Purpose

Constructs and manages the portfolio of external managers and funds — the count, sizing, complementarity, overlap and capacity of the manager line-up. Where BD-03 sources, researches and selects the individual manager, Manager Structure builds the roster: it is portfolio construction with manager mandates and fund investments as the units.

It is the core capability of the asset owner that allocates across a roster of external managers; it is dormant for the single-strategy and index manager, which runs a single in-house mandate or a replication book rather than a multi-manager line-up.

Service Operations

Optimise the manager structure — treat the multi-manager portfolio as a portfolio-construction problem: maximise expected active return for a given active-risk budget.
Decide manager count and sizing — the number of managers and the capital allocated to each.
Set the active / passive split — the core-satellite structure: how much of the portfolio is held in passive or core mandates versus active manager bets.
Analyse cross-manager overlap — the factor, style and correlation overlap across the manager line-up, and the interaction effect their combination produces.
Budget manager capacity — manage the capacity constraints of each manager and the roster.
Design fund-roster diversification — for a private-markets manager portfolio, the diversification of the fund roster across strategy, geography and vintage (consuming the SD-01.10 pacing plan).

Inputs and outputs

Inputs: the candidate managers and the selection recommendations from BD-03; the active-return and active-risk forecasts and correlations per manager; the active-risk budget; the SD-01.10 commitment-pacing plan.
Outputs: the manager weights and the core-satellite split, and the identified exposure gap — consumed by SD-05.11 Completion Portfolio Management and by BD-03’s commitment and mandate domains.

Entities

Consumes: Legal Entity (E-01, the managers), Fund & Vehicle (PM-01), Risk Measurement (E-19, risk_type = market for manager active risk); the SD-01.10 commitment-pacing plan.
Owns: none — the manager structure is an analytical artefact.

Standards

The manager-structure-optimisation literature — Waring, Whitney, Pirone & Castille, “Optimizing Manager Structure and Budgeting Manager Risk” (Journal of Portfolio Management, 2000) — treats manager structure as a portfolio-construction problem. No external standard governs it.

Open extensions

The boundary with BD-03 — BD-03 selects the individual manager and feeds candidates here; SD-05.10 constructs the roster.
The interaction with SD-05.11 — the manager structure’s residual exposure gap is what completion management closes.